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Details of Senate Republicans' tax plan released

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Republicans in the state Senate released details of the "North Carolina Tax Fairness Act of 2013" Republicans in the state Senate released details of the "North Carolina Tax Fairness Act of 2013"

 

RALEIGH, N.C. (AP) - Details released Tuesday by Senate leader Phil Berger's office and other documents about the upcoming "North Carolina Tax Fairness Act of 2013" sought by Senate Republicans, followed by examples of potential tax amount changes if the proposal became law according to a tax calculator on www.nctaxcut.com , a web site sponsored by the N.C. Republican Senate Caucus:
Plan details:
- reduces the top individual income tax rate from the current 7.75 percent to 5.5 percent in 2014, 5 percent in 2015 and 4.5 percent in 2016. The current rate on the lowest-income earners would be reduced from 6 percent to zero percent.
- applies the new zero percent individual income tax bracket to the first $10,000 on income in 2014, the first $12,500 in 2015 and 2016 and the first $15,000 in 2017.
- reduces the corporate income tax from 6.9 percent to 6 percent over three years. The factors used by multistate corporations to determine their share of North Carolina state taxes ultimately would be narrowed to cover sales only. The change likely would benefit manufacturing companies that export products out of state.
- reduces the combined local and state sales tax from 6.75 percent to 6.5 percent.
- expands the sales tax base to cover more services. The number of services subject to the sales tax would grow from about 30 currently to well over 100. The full exemption for the sales tax for prescription drugs and the exemption on the state's portion of the sales tax would be eliminated. The sales tax exemption for nonprofit groups would be phased out over time.
- reduces the business franchise tax by 10 percent, expands the franchise tax to apply to limited liability companies.
- eliminates North Carolina's estate tax, which currently applies to the value of an estate over $5.25 million, with a tax ranging from 0.8 percent to 16 percent. The exemption is $10.5 million for married couples.
Potential tax amount changes:
Yearly household income: $20,000
Number of dependents: 2
Filing status: Single/head of household
(Tax reduction) or increase: $661.
Yearly household income: $50,000
Number of dependents: 4
Filing status: Married
(Tax reduction) or increase: $845.
Yearly household income: $75,000
Number of dependents: None
Filing status: Single/head of household
(Tax reduction) or increase: ($1,522)
Yearly household income: $100,000
Number of dependents: 2
Filing status: Married
(Tax reduction) or increase: ($264)
Yearly household income: $250,000
Number of dependents: 4
Filing status: Married
(Tax reduction) or increase: ($6,369)

(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

 

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