RALEIGH – Apologists for recent steep increases in North Carolina’s sales and income taxes argue that our state’s relatively high rates in those areas are counterbalanced by our relatively low property tax rates.
This is a valid point for consideration, but it’s not as true as it used to be.
Since the 1930s, North Carolina has financed its public schools primarily with state taxes, while most other states have relied on property tax funding for education. But in the past 15 years or so, our property taxes have grown significantly more rapidly than the average state’s, even as our sales and income taxes have also been rising.
From 1987 to 1997, for example, the average state saw its property tax burden per person grow by about 2.1 percent a year. North Carolina’s property tax burden grew by 3.3 percent annually. Previously ranking near the bottom in local property taxes, we now come in at about 39th – certainly a welcome ranking compared to other states, but not enough to offset our high ranking in other tax burdens.
Here’s a link to more information on property tax burdens.
In 2001, the Tax Foundation ranked our combined state and local tax burden at around 28th in the nation – and first in the Southeast. After state and local tax increases last year, this ranking will probably end up at around 22nd.
Finally, taxpayers should brace themselves for more pain in 2002. Several large counties, including Mecklenburg and Wake, are facing significant fiscal pressure this year. And North Carolina’s state budget is as much as $900 million in the red, again.
Taxes, taxes everywhere – to drive us all to drink.