Tax Truth: As Residents File, Many Report Higher State Taxes
In a series of letters to the editor published in newspapers across NC in the last few weeks, residents have reported seeing their taxes increase, in contrast to claims made by politicians in Raleigh. While they say that "tax reform" in 2013 gave most North Carolinians a tax break, the reality is quite different.
Here are a few of the letters:
Regarding Rep. Paul Stam’s Feb. 27 letter “ Revenue prophecies”: He stated that that there were “significant cuts in personal and corporate income tax rates.” Who received the cuts? Certainly not the middle class.
I recently completed my 2014 North Carolina tax return. My marginal tax rate increased 37 percent from my 2013 return.
I would venture to say I am not alone in discovering the truth in who our General Assembly really represents.
As I read of the “tax simplification” discussions with our N.C. General Assembly and governor, I kept saying, “This will not be good.” I didn’t realize how right I would be.
Consider this jewel in our 2014 North Carolina tax code, “No itemized deductions included on federal Form 1040 (Schedule A) are allowed as North Carolina itemized deductions except qualified mortgage interest, real estate property taxes and charitable contributions.” What this means to us poor saps is: No deductions for medical or dental expenses, medical insurance or HSAs, no student loan or education expenses, no alimony payments and many more. Simply stated, “They got the gold mine, we got the shaft.” Especially those retired people who traditionally have excessive medical expenses.
Do the math! No matter what our “qualified mortgage interest, real estate property taxes and charitable contributions” plus our medical expenses amount to, we get to deduct $15,000, period.
As an older (75), lower income ($10,250 adjusted gross income) retiree, I just finished doing my 2014 taxes. As usual, since retiring, my federal tax was zero. My North Carolina tax under the new tax law was $162. I wanted to see what the new tax law difference was, so I refigured my North Carolina tax using last year’s tax laws and the same $10,250 AGI. The result was $105 in tax.
The new 2014 tax laws dropped the $2,000 pension deduction, the charitable deduction for non-itemizers and the extra standard deduction for being 65 or older or blind, causing my taxes to be 54 percent higher than they would have been using the old tax laws.
Thanks to the legislative members for their help. I hope the rich appreciate paying less tax when they buy their yachts and planes.