RALEIGH — Tuesday, April 15 is Tax Day in North Carolina.
First, and most obviously, it is the filing deadline for federal and state income taxes. North Carolina is especially reliant on its income tax system, which includes some of the highest marginal tax rates in the United States. The political class in Raleigh is waiting with baited breath to see how many North Carolinians will owe taxes, and how much. They’d like to get bailed out of making tough budget decisions by an April surprise of bountiful tax revenue.
Second, Tuesday is “CSE Day” down at the General Assembly. Groups of local taxpayer activists from communities across the state will be convening in the state capital at a barbecue lunch and rally hosted by the North Carolina chapter of Citizens for a Sound Economy, a nationwide public-interest group fighting for lower taxes, less regulation, and more freedom for American families and businesses. Former U.S. House Majority Leader Dick Armey will be the featured speaker at the event, which begins around 10 a.m. on the Halifax Mall north of the Legislative Building.
Third, while all this is going on, members of the North Carolina House will continue their consideration of a 2003-05 budget plan that got its first airing Monday night. The taxpayers sweating the last minute details of their tax returns, or sweating in the sun at the CSE gathering in Raleigh, can expect lawmakers to present them a timely “gift” — another round of costly tax increases.
Despite the efforts of Gov. Mike Easley and his willing handmaidens to deny it, his revenue proposal does constitute a tax increase. He would reimpose temporary increases in sales and income taxes passed in 2001 and scheduled to expire in June. He would also defer promised tax cuts for families. The House may say no to the latter measures — and they are the only ones that arguably could be called “delayed tax cuts.” Apparently, the Democrat-Republican leadership team in the House has decided to go ahead with the governor’s rate hikes in sales and income taxes. Much of the political class — key lobbying groups, higher education boards, school organizations, etc. — have endorsed the idea as a way of protecting their budgets from serious examination. The House package is expected to raise nearly $400 million in FY 2003-04.
That’s $400 million sucked out of the private economy, again. That’s two more years of the highest income tax rate in the Southeast and a combined state/local sales tax rate higher than the regional average and all but the sales tax rates of one of our neighbors (Tennessee’s combined sales tax is approaching 9.5 percent, but on the other hand it has no income tax). That’s two more years of hampering our economic recovery so that politicians can continue to lavish subsidies on university researchers, medical centers, corporations, and interest groups.
That’s Tax Day 2003. Congratulations.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.