Why Does Governor Propose Job Killing Tax Increase? | Eastern NC Now

Governor Beverly Perdue Tuesday proposed to raise the state sales tax rate by almost 16 percent in the midst of our state's worst recession in decades.

ENCNow
Press release

Study Indicates Increase Will Result in 8,792 Jobs Lost

    Raleigh - Governor Beverly Perdue Tuesday proposed to raise the state sales tax rate by almost 16 percent in the midst of our state's worst recession in decades. The Governor stated she will demand the legislature increase the current state portion of the sales tax from 4.75 percent to 5.5 percent.

    The Kenan-Flagler UNC School of Business estimated last year that 11,000 private sector jobs would be created as a result of the 2011 elimination of the "temporary" sales tax increase of 1 cent. Simple math indicates that if reducing the tax rate from 5.75 percent to 4.75 percent creates 11,000 jobs then increasing it by ¾ of a percent to 5.5 percent will destroy about 8,792 jobs in the private sector.

    Why would the Governor propose such a program while the state is still recovering from a recession?

    1. There is no downside for her! She is already on record in 2009, 2010 and 2011 demanding higher state sales taxes. (After campaigning against it in 2008.)

    2. She knows that the General Assembly will not approve it.

    3. By proposing $850 million in new revenue, the budget she submits for the 2012-2013 year will not need to make any realistic choices. She can propose all sorts of spending increases to please her political pals knowing that it will not happen.

    Current Law

    Tenn. - 7.00% + Local - 2.75% = 9.75% (note - Tenn. has no income tax)

    SC - 6.00% + Local - 3.00% = 9.00%

    GA - 4.00% + Local - 3.00% = 7.00%

    NC - 4.75% + Local - 2.00% = 6.75% (note--some local options take it ½ percent higher)

    VA - 4.00% + Local - 1.00% = 5.00%

    With Gov. Perdue's Increase:

    Tenn. - 7.00% + Local - 2.75% = 9.75% (note--Tenn. has no income tax)

    SC - 6.00% + Local - 3.00% = 9.00%

    NC - 5.50% + Local - 2.00% = 7.50% (note--Some local options take it ½ percent higher)

    GA - 4.00% + Local - 3.00% = 7.00%

    VA - 4.00% + Local -- 1.00% = 5.00%

    Governor Bev Perdue's tax increase would make it more likely that North Carolinians will go to Georgia or Virginia to purchase expensive goods and less likely that our neighbors from Tennessee and South Carolina will shop for expensive goods in North Carolina.
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