Working Families Suffer Thanks to Right-Wing Tax Shift
Starting this month the tax burden on working families increased thanks to a sales tax expansion. This is especially tough on working class families who will have to use a larger percent of their income when paying for already expensive services.
The state is balancing its budget and making up for the income-tax cuts by broadening the state sales tax to cover a growing array of services. Starting today, the 7 percent sales tax will be extended to a long list of services, including automotive repair, shoe repair, clock and jewelry repair, furniture reupholstering, cellphone and computer repair, tuning of musical instruments and clothing alterations
The counties - especially the smaller and more rural ones - will feel no pain. They'll be pleased. Lawmakers revamped sales-tax distribution formulas when they added the levy on services, so that poorer counties would do best. Cumberland, for example, will only see a $274,000 increase in sales-tax revenue. But Harnett will gain $3.9 million and Hoke's take will increase by $1.9 million.
What's worrisome here is the deliberate shifting of the tax burden away from income and toward goods and services. In a traditional progressive income tax system, lower-income residents have the lowest tax rates and the highest earners pay the highest rate. Increasing the sales-tax burden hurts the poor most, because they spend more of their income on now-taxable goods and services and generally live paycheck to paycheck. This is the down side of the "flat tax." But many proposals for that broad sales tax buffer it with rebates or exemptions for the poor. North Carolina isn't doing that. The poor simply have a new financial burden on their already-tired shoulders.