Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.
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LETTER TO THE EDITOR North Carolina Tax Reform Benefits Everyone by JOHN SZOKA On July 23, Governor McCrory signed landmark legislation that cuts income tax rates for all North Carolina's taxpayers and replaces the existing complicated system with a single, fair flat tax. Additionally, HB998, The Tax Simplification and Reduction Act, eliminates more than 40 special tax exemptions that favor one group or business over another; thereby "leveling the playing field" for everyone. A major component of the law is that it reduces future state spending. It's estimated that tax reform will save North Carolina taxpayers $4.75 billion over the next five years. As I said in closing debate on the floor of the House before the final vote, "Tax Reform is not an event, but a process." This year's tax reform is a significant piece of the economic revitalization process which the legislature began last session. As part of the process, this session we also tackled the state's massive Unemployment Insurance Debt and passed a far-reaching Regulatory Reform law. These laws, and many others, are designed to reward hard-working taxpayers, free up capital and spur job creation. This landmark Tax Reform law accomplishes several big things, and starting next year, the existing tax code will change in some very important ways. Personal Income Tax The law replaces the current tiered system of personal income tax rates (of 6 percent, 7 percent or 7.75 percent) with a flat tax, lowering the rate for everyone to 5.8 percent 2014 and then to 5.75 percent in 2015. We continue to protect our most vulnerable citizens by retaining an effective personal income tax rate of 0 percent and increasing the child credit $25 for families with incomes below $40,000. The law also more than doubles the size of the standard deduction, aimed at helping lower and middle income earners. For a married couple filing jointly, the first $15,000 of income will be exempt from taxation; for someone filing as the head of a household, the first $12,000 of income will be exempt. And for single filers, the first $7,500 of their income will be exempt. The law continues to allow taxpayers to deduct local property taxes, mortgage interest payments and charitable contributions — but caps the mortgage interest and property tax deductions at a combined $20,000. There remains no cap on charitable contributions that North Carolina's taxpayers may deduct. Broadens the Base The new law expands the sales tax base by adding a limited number of transactions that will now be subject to sales tax, including warranties, service contracts, the delivery, installation or repair of tangible personal goods (e.g. dishwashers or washing machines), and as you may have heard, certain amusements such as movie and theater tickets. The new law protects senior citizens and working families by keeping existing exemptions for Social Security income and medication and by not changing food taxes. Business Taxes The new law reduces Corporate Income Tax from the current rate of 6.9 percent to 6 percent in 2014, then to 5 percent in 2015, and it may fall to as low as 3 percent by 2017 — if the state achieves specified revenue targets. Although the new law does not change the franchise tax yet, it was referred to the Revenue Laws Committee for further study. (A franchise tax is not a tax on income — it is an additional tax on any corporation that conducts business). Reducing the corporate income tax to 5 percent will help make us more competitive in our region and attractive to businesses, which will in turn increase business investment in the state, and stimulate an increase in job opportunities. Conclusion HB998, The Tax Simplification and Reduction Act, passed with bi-partisan support in the House and is a major step in updating and simplifying North Carolina's tax system. Every hard-working taxpayer is rewarded with a lower tax burden. Loopholes were eliminated making the code fairer for all taxpayers. Future state spending was reduced and it's estimated that tax reform will save North Carolina taxpayers $4.75 billion over the next five years. This law is a prudent short-term step on the path to greater economic JOHN SZOKA, Representative, NC freedom in our state. General Assembly, Contributing Enter for your chance to WIN tickets Name____________________________________________ Address__________________________________________ _________________________________________________ Phone Number_____________________________________ Email____________________________________________ Please send completed entry form to Up & Coming Weekly, 208 Rowan St., Fayetteville, NC 28301 or fax to 910.484.9218. Advertising to Grow Your Business For effective advertising call 910.484.6200 today! www.upandcomingweekly.com Writer, COMMENTS? Editor@upandcomingweekly.com. WWW.UPANDCOMINGWEEKLY.COM DECEMBER 18-24, 2013 UCW 5