It wasn’t that long ago when the very same people who are now lambasting the General Assembly for broadening the sales tax base were saying that raising the sales tax rate on everybody was a good idea.
In fact, they liked increasing the sales tax so much they tried to do it twice in just three years. (State sales taxes are paid on top of the local sales taxes (and a host of other taxes) already collected by state and local governments.)
Broadening the sales tax base — more fairly distributing what items get taxed — is just one provision of a comprehensive tax reform package enacted last year by the new majority in the General Assembly. Tax Reform, the most significant in over 50 years, also included ditching North Carolina’s outdated progressive income tax structure in favor of a flat tax, and lowering rates for all income levels across-the-board.
The small expansion of what will now be subject to the state sales tax is limited to certain non-essential services, including warranties, service contracts and movie theatre tickets. Liberal advocacy groups have pitched a fit over this provision, asserting that the General Assembly is “raising taxes on the poor.”
Yet oddly enough, when former governor Beverly Perdue wanted to raise the sales tax rate in 2011 — which would have hit the poor especially hard on things like food, clothing, school supplies and other essentials — she was cheered on by liberal non-profit groups who claim to speak for the poor. “We praise the Governor for her announcement today,” said the left-leaning Budget and Tax Center at the time. “Governor Perdue’s proposal … would raise an estimated $863 million in additional state revenues next year.”
Let’s go even further back to 2009, when the Democrat-controlled General Assembly had already raised the state sales tax — in addition to imposing other massive new tax increases, including corporate and personal income tax surcharges, higher “sin taxes,” and the new “Amazon” digital sales tax.
At the time, the governor promised that the first tax increase would only be temporary. It was needed, she said, to plug a huge hole left in the state’s education budget. (Ironically, the shortfall existed in the first place because those same legislators were using one-time federal stimulus dollars to pay for recurring public school expenses — including teacher compensation.)
But in 2011, Governor Perdue would break that promise. She asked the legislature to increase the sales tax once again to replace the one that was set to expire — but the new majority (and quite a few Democrats) wouldn’t have it. Republicans, who took control of the General Assembly in 2011, reduced the sales tax over the governor’s veto.
The Senate’s new President Pro-Tem, Phil Berger, pointed out that the proposed sales tax increase would have made it more difficult for working families to purchase food, clothing, medical supplies and other basic necessities: “This regressive tax would make it more expensive for single moms to buy carryout food for their children, force seniors to pay more for medical supplies, and would negatively impact every level of society.”
“This last point,” said Brian Balfour, “is especially important to recall in light of attacks from the left claiming that recent tax reforms are not benefiting low-income households.”
So, who is raising taxes on the poor?
It depends on what the meaning of the word ‘is’ is.