With Monday’s deadline for filing income tax returns fast approaching, several liberal advocacy groups want to remind taxpayers that some of them will pay more this year under Republican-led tax changes.
Progress N.C. Action held a news conference Thursday at the Legislative Building to criticize Republican lawmakers’ decision to eliminate certain tax deductions, lower corporate income tax rates, and expand sales taxes to more services like car repairs.
“Gov. McCrory says that he has lowered taxes, but based on this list here, that’s just not true,” Progress spokesman Logan Smith said, pointing to a list of new sales taxes that started last month. “Gov. McCrory has raised taxes on working families.”
The state budget approved last year will drop the personal income tax rate from 5.75 percent to 5.499 percent in 2017. And the standard deduction will increase, meaning a married couple filing jointly won’t owe income taxes on their first $15,500 in income.
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The cuts will result in savings of about $50 or less for households with less than $30,000 a year in income, or about 10 percent of their tax burden, according to legislative projections. Meanwhile, new sales taxes began March 1 on car repairs and other repair, maintenance and installation services where contractors are already charging sales taxes on parts.
“This tax swap shifts the burden away from those who can most afford it onto those who can least afford it,” said Tazra Mitchell, a tax policy analyst at the liberal N.C. Justice Center. “That’s not how you build an economy that works for all.”
In response to Thursday’s event, the N.C. Republican Party issued a statement praising the GOP’s approach to taxes.
“Gov. Pat McCrory and the General Assembly have instituted historic tax reform that has grown the state’s economy, brought more business to the state and put money back in the wallets of hard-working North Carolina families,” executive director Dallas Woodhouse said.
Democrats argue that many taxpayers aren’t seeing it that way. They pointed to a recent poll from the left-leaning firm Public Policy Polling that found 54 percent of voters believe that their state taxes have increased in recent years – while only 9 percent said their state tax burden has decreased and 32 percent didn’t notice a change.
“The tax raises today are just incredible,” said Jan Fagerberg, a Raleigh small business owner who spoke at the news conference. “We cannot afford all this.”
Republican lawmakers plan to consider more income tax cuts when the legislature returns in late April. One option that’s been proposed would raise the standard deduction for personal income taxes by $2,000, a move that could save taxpayers up to $115 per year.
But Sen. Terry Van Duyn, an Asheville Democrat, said that approach won’t help the working poor.
“I laud a larger standard deduction, I think that’s a great idea, but it’s just not enough when you’ve got so many people working for low wages,” she said Thursday. “We have too many folks who can’t even use their standard deduction, because they’re working but not making enough.”
Van Duyn said legislators should restore the earned income tax credit, which Republicans eliminated in 2014.
“(Taxpayers) could use that little boost they’d get from the earned income tax credit to do things like get their cars fixed, especially now since that’s more expensive” with sales taxes added, she said.
Tax Day moved to April 18 this year
Thanks to an obscure holiday in Washington, D.C., taxpayers in North Carolina and across the country get an extra three days to prepare income tax returns this year.
The usual April 15 deadline happens to fall on Emancipation Day, which marks the anniversary of when President Abraham Lincoln ended slavery in the District of Columbia. That’s the only place where Emancipation Day is an observed holiday.
But federal law considers Emancipation Day a valid reason to delay the tax deadline, which moves to the following Monday – April 18 – for this year only.
And while North Carolina doesn’t celebrate Emancipation Day, the deadline for filing state income tax returns always matches the federal deadline.
That means both state and federal tax returns in North Carolina must be filed or postmarked by Monday, according to the N.C. Department of Revenue.