Democrats Move Forward with Job-Destroying Tax Increases

August 4th, 2009 by

Democrats Refuse to Cut Spending, Balance Budget on Families, Small Business

Raleigh, N.C. – Despite the fact that North Carolina has one of the highest unemployment rates in the nation and economists regularly say that higher taxes slow job growth, Governor Beverly Perdue and legislative Democrats have failed to cut state spending and instead decided to move forward with their plan to balance the state government’s budget with higher taxes on North Carolina’s families and small businesses.  The tax hikes include higher income, sales, cigarette, and alcohol and beer taxes; there are also new taxes on internet commerce.

Democrats’ $20.3 billion budget represents the same level of spending by state government as the recently completed fiscal year.  At a time when families, businesses, and local governments are balancing their budgets with spending reductions, Governor Beverly Perdue and her Democratic colleagues in the legislature have failed to reduce the level of actual spending at the state level.  Using several “creative” accounting methods, the Democrats claim that they have reduced state expenditures; a closer look at the budget reveals that spending in the 2009-2010 budget year will not be any lower than spending in the just completed 2008-2009 fiscal year.  North Carolina Democrats balance the state budget entirely with tax increases.

The Democrats’ one cent increase to the sales tax will generate an estimated $803.5 million in new government collections.  The internet tax will account for $11.8 million while added levies to taxes on cigarettes and alcohol will total $68.8 million.  Working families will be subject to roughly 90 percent of the Democrats’ new taxes.

There is also a new tax in the form of a two (2%) percent surcharge to the income tax liability of individuals making more than $60,000 a year. For those who earn more than $150,000 a year, the surcharge will be three (3%) percent.  This “tax on taxes” will adversely affect small businesses which create the majority of new jobs in North Carolina.

Senate Republican Leader Phil Berger (R-Rockingham) said, “During her campaign for Governor, Beverly Perdue said she would not raise taxes because to do so would harm the economy.  Then, after being elected, she proposed an increase in taxes in her first budget proposal.  Last week, she scuttled a proposed budget negotiated by her fellow Democrats saying she could not support raising taxes on working families.  Now she endorses this budget deal which hikes taxes working families, in fact it hikes taxes on every person in North Carolina.

“It is significant that this Democratic plan does not reduce overall state spending from last year’s level; they have not cut spending.  After years of bloated budgets and wasteful spending, Democrats have decided on higher taxes rather than smaller government.  Governor Perdue and legislative Democrats balance this budget on the backs of working families, destroy jobs, and delay economic recovery for North Carolina.”

House Republican Leader Paul Stam (R-Wake) said, “Apparently Governor Perdue and the Democrats think that the people who pay the sales tax either don’t work or don’t live in families.  But of course they do.  Using a nondeductible tax for 80 percent of her tax package is $120 million gift to the federal government.  Why would she think that is a wise choice?”

-Joint Caucus Press Release : Sen. Phil Berger and Rep. Paul Stam