The state of North Carolina collected over 10 billion dollars in personal income taxes during the year 2012. That’s ten times the corporate tax income and twice as large as the monies collected off of sales and uses taxes. But now the state of North Carolina is trying to figure out how to eliminate personal income taxes, it’s largest revenue producer.
Below are some key bills being worked on in the North Carolina Legislature.
- House Bill 985 –Overhaul tax code which includes a reduction of personal and corporate income tax rates and taxes some services.
- Senate Bill 669 – Reduces income taxes over a three year period.
- Senate Bill 394 –Eliminates mortgage interest deduction and property tax deduction.
Tax Reform: Eliminating the Mortgage Interest Deduction is considered
“In tax year 2011, filers deducted about $360 billion in mortgage interest, resulting in roughly $72 billion in forgone federal income tax revenue,” according to Pew Research.
“Taking away mortgage interest and property tax deductions for homeowners will devalue their property, hurt people who are currently in the market to purchase a home and will end up costing us precious jobs and hurting our overall economy. The mortgage interest and property tax deductions are vital to the stability of the American housing market and our economy. Eliminating these two important tax provisions will be a de facto tax increase on North Carolina’s homeowners,” said Patrice Willetts, 2013 President of the NC Association of REALTORS® at NCSpin
Tax Reform: TaxReformFacts.org reports:
“The MID saves the average homeowner thousands of dollars—each year—on their income tax return. It also helps support home values at the local level, and helps North Carolinians in search of their first home. Plus, getting rid of the mortgage interest deduction would hurt home prices. More than 60% of the families who claim the mortgage interest deduction have household incomes between $60,000 and $200,000, according to the NATIONAL ASSOCIATION OF REALTORS®. Finally, homeowners already pay 80% to 90% of the income tax in our country, and among those who claim the mortgage interest deduction, almost two-thirds are middle-income earners.
Tax Reform and Sale of Property— A Suggested “Transfer Tax” or “Home Tax”
Various tax reform plans have suggested imposing an additional “transfer-tax” on the sale of land or a home, using the term “conveyance fee”. But it’s really just a home tax. This is the same tax that voters and homeowners fought hard against in 2007 and was defeated 24 times on 24 local ballots with an average 78% margin against the tax. It’s the same tax that strips people of their hard-earned equity: the equity many people plan to use for their children’s education or for their own retirement. It was a bad idea then, and it’s still a bad idea today. The home tax, coupled with a tax on all the services involved in the transfer of real property could devastate the weakened real estate market and hurt North Carolina’s overall economy.
Tax Reform and Services: What’s it mean for homeowners and property owners?
In order for the state to lower or eliminate the personal and corporate income tax, some of the proposals include imposing a sales tax on services. An 8 percent tax on services would have a detrimental impact on homeowners trying to sell their homes. Imagine an 8% tax on the services provided by an Attorney; an 8% tax on the appraiser; an 8 % tax on the home inspector; and an 8% tax on the services for using a REALTOR®. It would add thousands to the cost of a typical home. Property owners would be unfairly targeted and will have to pay more. Owning a home will become more difficult. A new series of taxes that pile on to property owners isn’t reform; it just makes families pay more.”
For more information go to TaxReformFacts.org