RALEIGH, N.C. – Today is Tax Day and once again, middle class families are picking up the tab for Governor Pat McCrory’s massive giveaways to the wealthiest individuals and giant corporations. Under Gov. McCrory, life has gotten harder for families across North Carolina. In total, McCrory has raised taxes for the middle class in 50 different ways – all in order to give breaks to his special interest friends.

 “Governor McCrory likes to talk about a ‘Carolina Comeback,’ but too many middle class families in North Carolina are still living paycheck to paycheck without any relief. In fact, Pat McCrory has raised taxes 50 different ways on the middle class – all in order to line the pockets of the wealthiest individuals and largest corporations. These are just the wrong priorities. It’s time for new leadership that will stand up for the middle class for a change,” said NCDP Chair Patsy Keever.

50 Ways Pat McCrory Raised Your Taxes:

  1. Eliminated “personal exemptions” on income tax
  2. For taxpayers who wish to itemize their deductions rather than taking the standard deduction, the new law capped at $20,000 the combined deduction on mortgage interest and property taxes that taxpayers may take on their primary residences. Itemizing taxpayers may continue to claim unlimited charitable contributions as they are claimed on a federal income tax return.
  3. Eliminated a $4,000 deduction for government retirement income and a $2,000 deduction for private retirement income.
  4. Eliminated credits for child care, permanent and total disability, property taxes paid on farm machinery, education expenses and charitable contributions for those who do not itemize their deductions.
  5. Eliminated a deduction for contributions to North Carolina 529 college savings plans.
  6. The tax bill also eliminated a two-year-old deduction for personal business income. Taxpayers could deduct up to $50,000 in business income that counted against their personal taxes. Instead of filing their own income, many small businesses and partnerships pay taxes by way of their owner’s income tax statement. This is a break that was used by full-time workers who had outside business income – an office worker who picked up extra money mowing lawns on the weekends or a communication professional who took on occasional freelance assignments – as well as lawyers and doctors.
  7. Allowed the film production tax credit to expire in 2015.
  8. Allowed a number of tax credits, many of them aimed of business recruitment, to expire as they are scheduled to under current law.
  9. Made movie tickets and other amusements, which had been taxed a lower but often unseen privilege tax rate, now be taxed at the full sales tax rate.
  10. Increased 3 percent franchise tax on electricity and piped natural gas to the 7 percent sales tax rate.
  11. Replaced preferential 2 and 2.5 percent tax rates for manufactured and modular homes with the state rate of 4.75 percent. However, local sales taxes would not apply to these homes because they will be taxed under local property tax rates.
  12. Eliminated exemptions for nutritional supplements sold by chiropractors, effective Jan. 1, 2014.
  13. Eliminated exemptions for meals sold at higher educational facilities, such as college cafeterias, effective Jan. 1, 2014.
  14. Eliminated certain sales tax exemptions for newspapers sold in vending machines, effective Jan. 1, 2014.
  15. Eliminated the Energy Star and back-to-school sales tax holidays, effective 2014.
  16. Eliminated a sales tax break on certain bakery items, effective July 1, 2014.
  17. Applied sales taxes to certain service contracts associated with physical goods.
  18. Limited tax breaks for farm equipment and supplies to farms that can show at least $10,000 in direct farm income.
  19. Capped the sales tax refund for nonprofits at $45 million, while ordering the Revenue Laws Study committee to look into further restricting the refunds nonprofits can claim.

[WRAL, 7/19/13]

  1. Gax Tax Bill Changes Included A Hidden Provision So Mortgage Forgiveness Is Now Taxed As Income. “Senate Bill 20 is more than just a gas tax bill… When someone who is in a financial pinch has the amount they owe on their home forgiven through a debt relief program, that can be counted as income. The federal government decided not to tax this amount, but the state will under the Senate Bill 20. This change was controversial when the measure passed through the Senate because it levies a big tax bill on those trying to work their way out of debt.” [WRAL, 3/26/15; S20, signed, 3/31/15]

2015 SALES TAXES CHANGES

According to the North Carolina Department of Revenue, McCrory’s new sales tax is applied to the following:

  1. Automotive fluid exchanges, including oil, engine coolant/antifreeze, refrigerant, brake, power steering, windshield washer, transmission, differential.
  2. Automotive fuel system repairs including cleaning or inspecting fuel injectors, visual inspection of fuel lines, adjust throttle, fuel treatment.
  3. Automotive electrical repairs including battery tests, charge, or jump services; applying protective coat to battery terminals; visually inspecting wiring and wiring components; testing fuse; cleaning battery terminals or receptacles.
  4. Automotive tire maintenance and repairs including rotations, mount, balance, alignment, patch or plug; measure and adjust pressure.
  5. Automotive suspension maintenance and repairs including steering and suspension inspection; grease joints or bearings; pack bearings.
  6. Automotive inspections including preventative maintenance, multi-points, brake system, visual (belts, hoses, wiring, brakes, engine components, air conditioning components, lines, windshield wipers, etc.)
  7. Automotive adjustments or calibrations including belt tension, speedometer, tachometer, throttle, and set or adjust spark plug gap.
  8. Automotive maintenance including exterior washing, wax, or detail services; paint; removing scratches, dents, or dings; applying protective coating (spray on bed liners, clear cots, waxes, moisture/rain protection), window tinting.
  9. Automotive maintenance including interior reupholstering, cleaning (upholstery, carpet, windows), and applying protective coatings.
  10. Automotive repairs including troubleshooting a fluid leak or attempting to “diagnose an unusual noise coming from a motor vehicle, whether or not the source of the leak or noise is found or remedied.”
  11. Automotive restoration of headlights, moldings, trims, etc.
  12. Automotive roadside service fees “where the intent of the service call is to troubleshoot.”
  13. Performing a service or tune-up of a motor vehicle, lawnmower, trimmer, edger, leaf blower, pressure washer, generator, chainsaw, tiller, auger, “or other similar small engine;” boat; aircraft; ATV or dirt bike; moped; golf cart; or bicycle
  14. Calibrating watches, scales, guns or scopes
  15. Calibrating medical equipment including Lasik surgery equipment, thermometers
  16. Calibrating instruments “musical or otherwise;”
  17. Camera repairs
  18. Cleaning jewelry, copy machines, printers, “or other tangible property” including motor vehicles.
  19. Removing dents, dings, and scratches from “tangible personal property” including motor vehicles.
  20. Restoring or reupholstering furniture.
  21. Patching or mending clothes, tires, or any type of inflatable.
  22. Sharpening blades
  23. Polishing shoes, jewelry, or silver.
  24. Troubleshooting fluid leaks or attempting to identify an unusual noise coming from “other tangible personal property, whether or not the source of the leak or noise is located, determined, or resolved.”
  25. Troubleshooting prewritten computer software “to determine how to restore to proper working order.”
  26. Reupholstering boats
  27. Re-string or re-grip tennis rackets, golf clubs, or musical instruments.
  28. Tune pianos or other musical instruments
  29. Repairing laptops, cell phones, removing viruses/malware, conducting diagnostic tests, or adjusting computer settings.
  30. “Tangible personal property may include: clothing alterations; painting tangible personal property; embroidery; screen-printing; window tinting for motor vehicles.”

[North Carolina Department of Revenue, 2/5/16]

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The North Carolina Democratic Party (NCDP) is the North Carolina affiliate of the Democratic Party. NCDP works to elect Democratic public officials, encourages North Carolinians to become involved in Democratic politics, and fights for equality, opportunity and prosperity for all North Carolinians.

 

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Gene Nichol, Boyd Tinsley distinguished professor of law at the University of North Carolina, will speak at 7 p.m on Saturday, April 16
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