RALEIGH Republicans in the N.C. Senate unveiled their newest tax plan Thursday, continuing and expanding upon tax reforms enacted since 2013. As part of the budgeting process, the Senate majority is proposing to reduce personal and corporate income taxes, further raise standard deductions, and transform child tax credits into progressive child tax deductions.Proponents say the plan will usher in more than $1 billion in tax cuts, bringing the total tax reductions since Republicans took over the General Assembly in 2011 to approximately $4 billion.Under the proposal, personal income tax rates will drop from 5.499 percent to 5.35 percent.”From our models, these rate reductions will represent tax cuts or no taxes at all for 99 percent of taxpayers,” said Sen. Andrew Brock (R-Rowan). “It basically helps everyone.”The plan also raises the standard deduction from $17,500 for married filing jointly returns in 2017, to $20,000 in 2018. The zero bracket of head of household filings will increase from $14,000 to $15,000 and single filings from $8,750 to $10,000.The increase in the standard deduction is estimated to remove around 94,000 people off the tax rolls entirely. Overall, the personal tax burden under the plan will shift more toward higher earners due to raising the zero bracket. Under current law, those earning under $50,000 carry 11.2 percent of the tax liability, dropping to 10.4 percent under the new proposals. The proportion of total taxes paid by those earning over $200,000 will move from 37.5 percent to 38.3 percent under the plan.A family with two children that earns the median income of $46,868 has a current tax liability is $1,541, but that decreases under the Senate’s new plan to $1,416 for 2017 and $1,223 in 2018. Over the two year horizon, the $318 in tax reduction for the average median income family represents more than 20 percent decrease.Deductions are also reformed, for example allowing for unlimited medical cost tax deductions. Mortgage interest deductions are also reformed to get rid of an unintended marriage penalty for those couples filing jointly versus those filing individually, resulting in $22,000 cap for married couple filing jointly and $11,000 for individual filings.On the corporate side of things, the franchise tax is reformed to a flat tax $200 tax on the first $1 million of a businesses worth, up to $1 billion. Plan writers say this represents a $1,300 tax cut for small businesses.For corporate income tax, the plan reduces rates from three percent in 2017 to 2.75 percent in 2018 and 2.5 percent in 2019.Single-sales-factor taxing will move to market-based sourcing under the plan, changing the structure for broadcast media in the process.”It’s a more fair representation of taxing and tax policy,” said Brock. “The 1 percent that will pay more in taxes are single people that make over $100,000, and their increase will be merely an average of between $30 and $50 dollars more in taxes a year.”Expanding the scope of sales taxes, included in past plans, is not included in this proposal but Republican senators expect to continue to shift the tax burden toward point-of-sale structures and away from income taxes. Previous sales tax expansions created some confusion between the N.C. Department of Revenue and business owners as to exactly what is and is not taxable under the new regimes.”We’ll never stop and smell the roses,” said Brock, adding that Senate Republicans plan to continue following through on their tax pledges with the goals of making taxes simpler and less burdensome for families and businesses.
RALEIGH Republicans in the N.C. Senate unveiled their newest tax plan Thursday, continuing and expanding upon tax reforms enacted since 2013. As part of the budgeting process, the Senate majority is proposing to reduce […]
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