Category Archives: TAXES

Watchdog group warns of staggering tax increase in Craven County!

By Hal James & Raynor James
Coastal Carolina Taxpayers Association

NEWS1-Watchdog-group-color-imageNEW BERN — Instead of discussing the suggestions of taxpayers made at its most recent public hearing on next year’s proposed budget, members of the Craven County Board of Commissioners have challenged the veracity and honesty of some of the speakers at the hearing.

The proposed budget is scheduled to be voted on by the Commissioners at its meeting at 8:30 on the morning of Monday, June 20. Yes, we know! Working folks cannot be there. Is this an accident? On purpose? (2nd floor, Craven County Administration Building, corner of Craven and Broad Streets, in downtown New Bern.)

Taxpayers who object to a whopping 15 percent increase in the tax rate should be there. Taxpayers who object to the expansion of the Federally Qualified Healthcare Center to a second location that will cost approximately $950,000 per year should be there. Taxpayers who object to raising the salaries (by $1.2 million dollars) and benefits (by $140,000) of county employees should be there. Taxpayers who object to the county’s hiring additional employees should be there. Taxpayers who object to the Board of Commissioners’ plan to give the Craven County Board of Education an increase of $1 million for current expenses, $465,000 more for technology, and $1.1 million dollars more for capital outlay should be there.

Just to put the school board’s increase into perspective, a teacher with 10 years’ experience earns $36,710, but the receptionist at Central Services is paid $31,836; the Superintendent is paid $198,971; an assistant superintendent gets $124,976 two more assistant superintendents each get $121,940; a leadership development coach gets $85,208; the director of K-8 education gets $81,440; the director of secondary education gets $80,492; an ECP (whatever that is) director gets $80,384; and a payroll administrator gets $74,239.

Are you angry yet? Our hard earned tax dollars are not going into the classroom. A badly disproportionate amount is siphoned off to the Central Services office.

That’s one example. Proposed budget expenditures are peppered with them.

If all this makes you “mad as hell,” will we see you at the Commissioners’ meeting on the morning of June 20? If you don’t live in Craven, we urge you to check on how your own local tax money is being spent – wherever you may live! Chances are, you will not like it.

Elected officials in Craven County no longer work on behalf of taxpayers

Watchdog group says every budget should start with a ‘blank page’

Members of the Coastal Carolina Taxpayers Association turned out in force for Monday night’s meeting of the Craven County Board of Commissioners. First row, from left: Kim Fink, Glenn Fink, Hal James, Ray Griffin, Betty Harper, and Bill Harper. Second row, from left: Bob Griswold, Mary Griswold (partially obscured), and Ann Bowman.

Members of the Coastal Carolina Taxpayers Association turned out in force for Monday night’s meeting of the Craven County Board of Commissioners. First row, from left: Kim Fink, Glenn Fink, Hal James, Ray Griffin, Betty Harper, and Bill Harper. Second row, from left: Bob Griswold, Mary Griswold (partially obscured), and Ann Bowman.

By Hal James and Raynor James | Coastal Carolina Taxpayers Association

NEWS-Page-A-13-Craven-The-Law-image NEW BERN — About 30 disgruntled taxpayers attended the June 6 public hearing on Craven County’s proposed budget. Most of them are members of the Coastal Carolina Taxpayers Association (CCTA), and several of them spoke in opposition to the proposed tax increase.

CCTA Chairman, Glenn Fink, read the group’s Mission Statement. In a nutshell, it calls for smaller government, lower taxes, freeing the free enterprise system so that it can actually function, adherence to the Constitution, and personal freedom with personal responsibility.

He then spoke about the purpose of government and ended by requesting the Commissioners to reduce County expenses by 15 percent

Hal James, CCTA Watchdog Committee Chairman, thanked the Commissioners for the open way they had conducted their deliberations on the budget, but criticized the budget process, which starts with the County Manager’s recommendations. He pointed out that the County Manager wants to attract and keep good employees, so his recommendations are apt to involve pay raises and benefit increases for them, plus items on the wish lists of each department head.

All new figures start from last year’s budget (and whether it was too high is never questioned), gets added to, and then the tax rate is set. In this case, it looks like there will be a 15% increase in the rate plus one cent per $100 of property value. The whole process needs to be canned.

Seen here Monday night, from left: Craven County Commissioners Dacey, McCabe, Sampson, Liner, Tyson, Jones, and Mark.

Seen here Monday night, from left: Craven County Commissioners Dacey, McCabe, Sampson, Liner, Tyson, Jones, and Mark.

Each year’s budget needs to start with a blank page, and every expense needs to be questioned.

Kim Fink, CCTA’s Public Education Chairman, questioned the practice of the County Budget’s funding charities. She said that many of the charities are worthy of contributions from citizens, but it is not right for the County government to force her to contribute to them. She believes it is her right to choose where to make her charitable contributions.

Raynor James, CCTA’s Legislative Action Committee Chairman, likened the County government and the County citizens and businesses to two people on a see-saw. When government goes up by growing, expanding, and taking more in tax money, the people and private businesses go down by paying out more tax (otherwise discretionary) money and being hampered by more regulations. Conversely, when the private sector is up, people make improvements to their homes, board pets and take trips, expand their business, hire others, and the like. This kind of expanding economy helps everyone. Rich and poor. Poor people do not typically provide jobs for others, but prosperous people do. A rising tide lifts all the boats.

Randy Siler, CCTA’s Second Amendment Committee Chairman, quoted from Bastiat’s (please check spelling) book, The Law, and talked about the notion that we the people cannot give government the right to do things that we as individuals cannot do.  We cannot forcibly take from one person to give something to another (that’s stealing), so we could not have possibly given that right to government.  Bastiat uses the phrase “legal plunder” when referring to government’s proclivity to do this.

In a Letter to the Editor submitted to another publication, CCTA member, Mary Griswold, said, “The Commissioners explained that more than half of their spending was mandated by the state and federal government and could not be cut. They then explained that more spending was needed to fund new programs. At one point they explained that a new program, involving a facility to maintain and employ 12 employees (full and part-time) wasn’t going to cost Craven County taxpayers anything because it was state or federally funded. Where do they think state and federal funds come from?

According to the North Carolina Department of Commerce, government employees are earning (on average) $300 dollars per month more than private industry employees. Why do employees of Craven County need a raise? Money to provide the raises will be paid by people who in many cases have seen the value of their largest single asset (their homes) go down, and the value of their incomes reduced by (under reported) inflation. Who is looking out for them?

It’s a shame but the Commissioners hired to represent the people spend far more time with county staff than they do with the people they represent. They serve of the Boards of various organizations. which then apply to the county for taxpayer money. They belong to organizations that teach them how to expand the size of government. They get led astray.

We’re specifically discussing Craven County here, but isn’t it typical of counties in our area? Perhaps we the people should either convince our Commissioners to work for us, or find Commissioners who will.

Wants, needs of county & town governments outpace modest growth in tax base

Pamlico taps savings for $1.2 million. Oriental ups property tax. Craven continues spending spree.

Monday night, Bossy Hardison, (left) the Pamlico County Forest Ranger; and Andy Meadows, District Forester, managed to eke out a commitment from the Pamlico County Commissioners to fund 40 percent of the cost for a new pickup truck. The two men will request the remaining funds from state government.

Monday night, Bossy Hardison, (left) the Pamlico County Forest Ranger; and Andy Meadows, District Forester, managed to eke out a commitment from the Pamlico County Commissioners to fund 40 percent of the cost for a new pickup truck. The two men will request the remaining funds from state government.

News Analysis

EASTERN NORTH CAROLINA – Local economies are on a steady, but slow recovery from the Great Recession. However, local town and county governments can’t wait. They want to party like it’s still 2005 and 2006 – when real estate values were hitting unheard of highs, and generating plenty of property tax revenues along the way.

Have some pity on the poor guys and gals who get elected to public office – they are always being asked to fund this or that project.

Charities and nonprofits want money. Department heads show up to plead for new bells and whistles – and, of course, argue eloquently for employee pay raises. And, then there’s always higher health insurance premiums, which occur because ‘third parties’ pay the bills. Unlike the price of gasoline, health care costs are not subject to the good old laws of supply and demand – where the tough buying decisions of consumers automatically set an appropriate price.

So, it’s mighty hard for an elected official to say ‘no.’ Expenditures get approved, more often than not. Across eastern North Carolina, budget preparations are now in full swing. Your county and town must come up with a balanced budget for the next fiscal year, which begins July 1. When things are tight, seldom does much get cut. The usual options are: Tap savings or increase taxes!

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The table, above, describes a boatload of increasing expenditures for Pamlico County.

 

The table, above, clearly shows that ‘fund balance’ (fancy word for government savings account) is how Pamlico County officials will close the gap this year.

The table, above, clearly shows that ‘fund balance’ (fancy word for government savings account) is how Pamlico County officials will close the gap this year.

Governor Pat Mccrory Joins Secretary Susan Kluttz in New Bern for Historic Tax Credit Tour

Governor_McCrory_HeadshotGovernor Pat McCrory will join N.C. Department of Cultural Resources Secretary Susan Kluttz, Mayor Dana Outlaw, the Board of Aldermen, city staff and other local leaders Wednesday, April 8 at 2 p.m., as part of the state historic tax credit tour of historic buildings that have utilized the recently expired historic tax credits. Various stops throughout New Bern will be included and Governor McCrory, Secretary Kluttz and city officials will kick off the visit at the Isaac Taylor House located at 228 Craven Street.

“The Historic Tax Credits brought jobs and economic development to rural towns and big cities across North Carolina,” said Secretary Kluttz. “The rebirth of one abandoned downtown building has a ripple effect throughout a community and often sparks a renaissance of development in nearby structures. In addition, these historic buildings and mills are an emotional tie to our heritage and exemplify what makes North Carolina unique. These credits are critical for North Carolina’s economic recovery. ”

Historic tax credits were used by business and homeowners who owned historic properties listed in the National Register of Historic Places to preserve their buildings within defined guidelines. Used in 90 of North Carolina’s 100 counties, in both rural and urban areas, these historic tax credits boosted local economies and created jobs, while preserving communities’ historic cores and our state’s priceless historic character.

Since 1998, more than 2,400 historic tax credit projects have been completed statewide bringing more than $1.6 billion of private investment into North Carolina communities. North Carolina’s historic tax credit program ended on December 31, 2014.

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Taxpayer watchdog sinks teeth into juicy morsels

10582950_262100953981185_438636700417457010_oBy Hal James | Coastal Carolina Taxpayers Association

NEW BERN — Security concerns at the Human Services Building is a subject has come up in each of the last several Craven County Board of Commissioners meetings. It started back on Nov. 17, when Social Services Director Kent Flowers presented a request that the Board consider a WEAPONS BAN in county buildings.

That went over like a lead balloon (kudos to the Commissioners), so during his song and dance routine, Mr. Flowers modified his request to ask for armed security at the Human Services Building.  At the Jan. 20 meeting of the Board, Mr. Flowers gave a very poorly done slide presentation to try to convince the Board that his concerns were justified. He also stated that, even though he has a concealed carry permit, he is not allowed to arm himself at the Human Service Building to protect himself or the other employees.

At a subsequent Board meeting on Feb. 2, I petitioned the Board on behalf of the Coastal Carolina Taxpayers Association and asked them not to use taxpayer dollars, but to change whatever ordinance, personnel regulation, or whatever deprived the employees of their God given and Constitutionally protected right to bear arms.  

The next day, Feb. 3, the Board of Commissioners decided to form a subcommittee to meet with personnel at the Human Services Building and study the situation and report back to the full Board. The members of the subcommittee are Commissioners McCabe, Dacey, and Liner.  Let’s hope their solution of preference is self protection, not more taxpayer dollars. 

CCTA concern about higher personal property tax rates 

At the Jan. 20 Board meeting, Glen Jones, County Assessor, expressed concern that, for the first time since the Great Depression, property assessments might go down, and that the tax rates would have to be increased to produce the same revenue as the 2014 fiscal year.  Isn’t that interesting?  Since your property is worth less, you are presumably less well off, and inflation is on steroids; therefore, you should pay tax at a higher rate??? 

DOESN’T ANYBODY IN GOVERNMENT EVER CONSIDER JUST CUTTING THE SIZE OF GOVERNMENT???

Speaking of growth in government, the county-owned in-patient hospice facility is still on track; the Federally Approved Heath Center (FAHC) Certificate-of-Need (CON) is also still on track; AND Craven County Social Services just received more tax dollars for contract hire for developing an Acquisition Plan for the Center for Medicare and Medicaid service (CMS) at a cost to taxpayers of $115,500 for a six-month contract. You should read the demands this CMS makes on the county in order to obtain this money from the feds.  Is there never ANY push back?

The county authorized about $75,000 for “dues” to the newly reorganized Craven 100 group that consists of private business, officials from Craven County and from several cities in the county. It wasn’t clear how often these “dues” will be paid by the taxpayers, but you can bet the private businesses won’t be paying much!  More growth in government.  More demands for tax money from overburdened citizens.

Transparency in Government

I didn’t fully appreciate how far we have come in transparency in government with the Craven County Board of Commissioners until last night when the subject of “consent agenda” came up again. Commissioner Dacey, much to his credit, said that the public needs confidence that all business conducted by the Board is done in public. Use of the consent agenda leaves suspicion that much has been decided outside the public view.

If you want to see outlandish abuse of the consent agenda, go to some Craven County Board of Education meetings. About the only thing the public sees is awards and ‘atta-boys.’ What little business the School Board does that the public is privy to comes after the citizens are invited to leave at the conclusion of awards and “feel good about your Board” presentations.

The consent agenda is approved so fast that citizens have no idea what the Board did.

Nowadays, a great deal of information of concern to citizens can be found on the Craven County website.  Examples are a full Board meeting agenda with attachments, posted the Friday before a meeting at which citizens can petition on that meeting’s agenda items, financial reports and audit reports, public hearings schedule, and even a copy of the Agreement Conveying Real Property For Economic Development Purposes.  This represents a HUGE improvement over the last few years, and I encourage all citizens to avail themselves of this opportunity to learn about county business first hand.

Joint Meeting of the Craven County Board of Commissioners and the Board of Education

This important meeting will be held on Feb. 26 at the School Board Administration Building, 3600 Trent Road, at 7:30 a.m.. The agenda has not been set yet, but Commissioner Dacey expressed concern that his request for information about student reading levels at third grade, and Common Core testing concerns have not had a response.

(The Board seems to be facing the same stonewall seen by the Public Education Committee of the Coastal Carolina Taxpayers Association.)

County Commissioner Liner expressed concern that the various budgets kept by the School Board could be confusing as to sources of the funds. Public schools receive federal, state, AND county taxpayer funds, and they seem to hide the other two sources when they make budget requests of any one source. I would add to what Commissioner Liner said that it is confusing to say the least. One could conclude that the process is designed to be misleading.

The Board of Education would be much improved if it practiced transparency.

Local educators live it up on taxpayer-paid trip to Memphis

Conference billed as ‘Professional Development’ allows plenty of time for sightseeing

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By Jeff Aydelette | Staff Writer

MEMPHIS, TENN – Photos received from a confidential source show a quartet of administrators and faculty members from Pamlico County High School, enjoying themselves along Beale Street, a major tourist attraction close to the Mississippi River in downtown Memphis.

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The images were presumably taken during breaks from a three-day national conference, where speakers and workshop leaders counsel educators on better ways to improve the learning experience at their respective schools. A website for the conference indicates that Thursday, July 31, is the final day.

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Many of the digital pictures can best be described as ‘selfies’ – in fact, Lisa Jackson, the high school’s principal, appears in at least four photographs where she appears to be holding a camera at arm’s length. Also shown in various photos are Kevin Yost, who doubles as the high school’s football coach and assistant principal; high school history teacher Joshua Gaskill; and school librarian Shirley Holt.

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The cost of the Memphis trip, including registration fees, airfare, meals, and lodging, was not available by press time of this newspaper. In recent years, county school officials have repeatedly cited tight finances in their budget requests to the Pamlico County Commission. Usually, the commissioners closely scrutinize monies allocated for travel.

In February of 2013, a trio of school administrators caught flak when news leaked of a similar multi-day conference – that one held in Las Vegas.

State eyes services for sales tax

N1201P61002CBy Jeff Aydelette | Staff Writer

RALEIGH – Legislating can be messy. Sort of like making sausage. Things often get thrown in at the last minute. And, there’s no better way to find obscure, and potentially hot topic stuff, than in the final section of a new law. With his signature Tuesday, Gov. Pat McCrory officially codified new legislation that has a warm fuzzy name – the Tax Simplification and Reduction Act.

We thought you might like to peruse the very last words of this new law. Pay particular attention to Item 7. That’s the seed that could quite quickly grow into a new sales tax on a multitude of services – things like hair styling, dry cleaning, chiropractic treatments, even baby-sitting.

Legal advice is also a service that could possibly be taxed, but don’t look for that to happen. There are too many lawyer-legislators in the North Carolina General Assembly who would squawk:

The Revenue Laws Study Committee is directed to study the tax issues listed in this subsection. The Committee may report its findings, together with any recommended legislation, to the 2014 Regular Session of the 2013 General Assembly upon its convening.

  1. The scope and application of the privilege tax at the rate of one percent (1%) with a cap of eighty dollars ($80.00) that applies to mill machinery and on other machinery and equipment purchased by certain industries and companies.
  2. The feasibility of a preferential tax rate on diesel fuel sold to railroads, fuel sold to passenger air carriers, and fuel sold to motorsports.
  3. The authority of cities and counties to impose a privilege tax on businesses and the various State privilege license taxes.
  4. The impact of the elimination of the State and local sales and use tax refund on nonprofit entities and their ability to fulfill their stated mission.
  5. The benefits and fiscal impact of allowing corporations to deduct net operating losses as opposed to net economic losses.
  6. The simplification of the franchise tax base calculation and the elimination of the franchise tax.
  7. The feasibility of expanding the sales tax base to include additional services.
  8. The application of the corporate income tax rate reduction trigger formula.
  9. The low-income housing tax credit.
  10. The distribution of the sales tax collected on electricity and piped natural gas to cities.

State’s tax policy lousy for growth

NEWS1-Tax-policy-map
Special to the County Compass

Editor’s note: Last week before a hearing of the Finance Committee of the North Carolina Senate, Tax Foundation economist Scott Drenkard offered an overview of the negative effects of existing tax policy and offered alternatives. Here are his slightly edited remarks:

Chairman Rabon and Chairman Rucho, Members of the Committee:

My name is Scott Drenkard, and I’m an economist at the Tax Foundation. For those unfamiliar with the Tax Foundation, we are a non-partisan, non-profit organization that has monitored fiscal policy at all levels of government since 1937. We have produced the Facts & Figures handbook since 1941, we calculate Tax Freedom Day each year, and have a wealth of data, rankings, and other information at our website, www.TaxFoundation.org.

I’m pleased to have the opportunity to speak today with regard to the Senate Finance Committee Substitute to H.B. 998, a comprehensive bill to restructure North Carolina’s tax code. While we take no position on the bill, I hope to give some perspective based on our research.

In January of this year, my colleague Joe Henchman and I released a book titled North Carolina Tax Reform Options: A Guide to Fair, Simple, Pro-Growth Reform. In it, we detail reform recommendations in line with the principles of sound tax policy: Simplicity, neutrality, transparency and stability. 

The focus of my testimony today is that tax structures matter just as much as tax collections. In other words, how North Carolina collects taxes can have fundamental impacts on economic growth and deadweight loss. With careful consideration, the Tar Heel state can collect the revenue it needs for necessary government services without stalling the engine of economic growth.

Taxes and Economic Growth

Rarely does empirical economic literature speak so strongly in unison as it does about the effect of taxes on economic growth. In 2012, my colleague Will McBride conducted a comprehensive study of peer-reviewed literature on economic growth and tax levels. He found that of the 26 studies written on the topic, 23 find that raising taxes hurts economic growth. The three studies that disagree had statistically insignificant results, and all studies published in the last 15 years find that raising taxes hurts growth. This last fact is especially convincing, as these more recent articles address statistical problems with early studies on the topic.

The bill before the committee cuts taxes to the tune of $1.4 billion, and keeping that money in the private sector will create economic growth immediately and in the long run. 

The Corporate Income Tax 

A central element of this bill is the elimination of the corporate income tax by the year 2017, a move that would make North Carolina one of just four states without a corporate income tax or gross receipts tax. This reform is beneficial for a few reasons. First, corporate income taxes are generally considered to be the most economically destructive. Of the economic literature that distinguishes between types of taxes, the consensus is that corporate income taxes hurt economic growth most, followed by personal income taxes, then sales taxes, and finally property taxes least.

Add to this the fact that corporate income taxes represented just 4 percent of statewide state and local collections in 2010, and in many ways corporate tax elimination is a high “bang-for-your buck” option to increasing growth. As opposed to simply cutting tax rates, elimination of an entire tax also reaps benefits in compliance costs.

Each year, corporate entities spend millions on attorneys, accountants, and tax consultants to comply with the corporate income tax, carefully structuring their income to achieve lower tax bills through the use of special credits even if doing so doesn’t make business sense otherwise. Elimination of the tax entirely removes these costs and allows businesses to spend that money on other resources that better serve the economy.

Finally, economists agree that corporate income taxes are not even borne by corporations themselves. They are passed on in one of three ways: to consumers in the form of higher prices, to workers in the form of lower wages, and to shareholders in the form of lower dividends. To review, state corporate income taxes are the most damaging tax to growth, they don’t collect very much revenue, they have large compliance costs, and they are ultimately passed on. 

Cutting and Flattening the Income Tax

North Carolina’s individual income tax, first enacted in 1921, has a graduated rate structure, meaning that taxable income above each threshold (after subtracting deductions and exemptions) is taxed at progressively higher percentages.

North Carolina’s top income tax rate is the highest in the region, and the other lower rates are still relatively high and kick in at low levels of income (see Figure 1). As North Carolina grows its finance sector, many prospective employees will have income levels above the top bracket, so the comparison to other states in the region (and other finance centers) is important for relocation decisions.

Figure 1: Top State Income Tax Rates, Tax Year 2013

Excessive taxes on income are also generally less desirable than taxes on consumption because they discourage wealth creation. In a comprehensive summary of international econometric tax studies, an OECD study found that personal income taxes are among the most destructive to growth, being outdone only by corporate income taxes. The authors found that consumption and property taxes are the least harmful.

The economic literature on progressive income taxes is especially unkind. For example, the OECD study finds that reductions in the top marginal rate of income taxes would be beneficial to long-term growth. Examining the period 1969-1986, Mullen and Williams (1994) found that higher marginal tax rates reduce gross state product growth. This finding even adjusts for the overall tax burden of the state, lending credence to the principle of broad bases and low rates.

For these reasons, I’m pleased to see that this bill and several of the other bills being considered in North Carolina are pushing for a flat income tax.

Estate Tax Repeal 

While estate taxes are often a polarizing issue, a 2009 poll by the Tax Foundation found that they are viewed as the most “unfair” of all federal taxes. Though our poll didn’t ask, I think this is largely because of the posthumous nature of the tax and the fact that it taxes income that has already been taxed once.

While these elements make the tax unfair, they also hurt the economy. As pointed out by the Joint Economic Committee in a 2012 report, the federal estate tax has since its inception decreased capital stock by $1.1 trillion due to discouragement of savings and the taxing of intergenerational transfers, which are perhaps the largest source of aggregate capital in the economy. The estate tax discourages savings by promoting a “die broke” mentality, as untaxed consumption becomes relatively cheaper than savings for those who intend to build wealth and bequeath a gift to inheritors, such as children or grandchildren. 

Further, the tax is among the most complex taxes. Some estimates show that the compliance costs of collecting the tax (estate and gift planning) actually exceed the amount the tax brings in. State estate taxes just add to the complexity. 

Reforming the Sales Tax: Taxing Business Inputs Distorts the Economy 

North Carolina is not alone in needing to modernize its sales tax. In the 1930s, when sales taxes were first created, they were placed on sales of “tangible personal property,” or goods. Services have not been traditionally subject to sales taxes. This base worked well for a time, as goods represented about two-thirds of the economy. But today, the U.S. economy is fundamentally service-based, with goods representing only one-third of trade and services comprising the other two-thirds.

The result is that instead of expanding the base of the sales tax to services as the economy has changed, states have just raised rates on the existing base defined back in the 1930s, meaning states tax goods at very high rates, while services largely pay no sales tax. 

For the sales tax to remain a viable revenue source in the next two decades, services will have to be included sooner or later in all states that rely on the sales tax. The bill introduced today is different from other bills the Senate and House have considered in that it doesn’t include expansion to services. My hope is that if this legislative body is not able to make room for that reform in this session that they will flag reform for future examination.

But another equally important sales tax reform is the exemption of business-to-business transactions from the sales tax. Business inputs should be exempt not because businesses deserve special treatment, but because failure to do so results in “tax pyramiding,” the process whereby taxes stack on top of each other as raw goods move through the production process.

As an example, if one were to build a car under a sales tax regime that taxes business-to business transactions, the rubber of the tire would be taxed once when it was sold from the rubber producers to the tire company, then taxed again when the tire is sold to the car company, then taxed a final time when the finished car is sold to the end consumer. This practice inordinately burdens industries with long production lines. 

Finally, taxing business-to-business transactions reduces tax transparency, because while a statutory rate paid by the consumer at the point of final sale may be low, the business-to-business taxes are already embedded in the price of the product. 

Many states try to avoid these problems by engaging in the laborious task of picking products that are frequently used as business inputs and individually carving out exemptions for them in the sales tax code. This approach is a step in the right direction but does not and cannot ever comprehensively address all the items that businesses use in the production process and should therefore not pay sales taxes on.

In the materials I’ve been able to obtain on the current bill before the committee, it seems to be moving in the opposite direction, with some of the new expansions to the sales tax falling on business-to-business transactions.

I’d like to hold out the sales tax treatment laid out in an earlier version of S.B. 677 as a straightforward solution to this problem. That bill expressly excludes businesses from paying sales taxes on products that are used in production 

Conclusion

In closing, this session represents a unique opportunity for North Carolina to enact serious, growth-maximizing tax reform. I’m excited to see so many good ideas on the table, and I look forward to your questions.

 

Letters stall tolls – for now

 

But booth already gobbles power

Lights and heat pump for the unoccupied tollbooth now operate 24 hours a day, 7 days a week. An alert motorist snapped these photos Wednesday afternoon. Photocopies of the electric bill for this structure have been requested by The County Compass under the state’s Public Records law.

Lights and heat pump for the unoccupied tollbooth now operate 24 hours a day, 7 days a week. An alert motorist snapped these photos Wednesday afternoon. Photocopies of the electric bill for this structure have been requested by The County Compass under the state’s Public Records law.

By Henri McClees | Special to the County Compass

We have now stopped the new ferry toll rules by submitting more than 10 signed letters requesting legislative review pursuant to NC General Statutes Chapter 150B.

On Thursday, the NC Rules Review Commission meets in Raleigh. If 10 letters had not been submitted within one day after this Commission meeting, the new ferry toll rules would have automatically gone into effect, and tolls collection would be required starting July 1, 2013, regardless of what the legislature is doing.

This “Ten Letter Rule” is a method for citizens to object to a specific rule and ask the legislature to review the rule before it goes into effect. We, as citizens, wrote 10 letters, and we have triggered a legislative review of the proposed rules for the new ferry tolls. 

The writing of rules is a normal part of bureaucratic governance.  These rules were written as required by law because the legislature imposed new ferry tolls. The statute imposing new ferry tolls is two sentences long. The rules are several pages of detailed statements of the amount of tolls and other detailed information. The writing and implementation of rules is an important, but little known, part of the process of how a bill passed in the legislature “comes home” to impact your life.

The NC House Transportation Committee did not hear our ‘good ferry bill’ (House Bill 475, titled ‘Ferry Tolling Alternatives’) during its Tuesday meeting. We wanted them to recommend approval of this bill to their counterparts in the House, and we appreciate all of your calls and e-mails to them for this purpose. We expect to maintain our momentum for House Bill 475.  The bill sponsors are strong and enthusiastic.  We will let you know further progress as it happens next week.  Thank you for your help and continuing support!

Editor’s note: Henri McClees and her husband Joe are Oriental-based lobbyists hired by Pamlico, Beaufort, and Hyde Counties in an attempt to repeal, or negate, existing legislation that requires tolls for the first time on state-run ferries for crossings of the Neuse and Pamlico Rivers.

Will letters to legislators turn the tide on looming ferry tolls?

 

PAGE-21-NEWS-CUT-MAILING-PICRolf Anselm of Oriental, known to many of his friends as Popeye, is doing his part to oppose legislation that will impose tolls for the first time on state-run ferries across both the Neuse and Pamlico Rivers. Saturday morning he was spotted mailing hand written notes to 14 state legislators, using makeshift address labels clipped from a page in the May 2 issue of the County Compass. For readers who would like to emulate these commendable efforts, e-mail info@compassnnews360.com and we will send you the list of legislators used by Anslem for his mini-mailing – each ready to be clipped and stuck to an envelope with transparent tape.