Under the Dome

Dome: Tax ideas on the table including capping local sales tax

May 13, 2013 

A week after Senate Republicans unveiled an ambitious – yet controversial – tax overhaul measure, the forthcoming legislation continues to take shape.

Among the ideas on the table: capping localities’ ability to add to the state sales tax at 1.5 percent instead of the current 2 percent. It’s part of how lawmakers get the 6.5 percent combined state and local sales tax (The state sales tax would go from the current 4.75 to 5 percent). But any change is likely to unnerve local governments, given the restraint on their ability to raise revenue.

Sen. Bob Rucho, a Charlotte Republican, said localities won’t lose money because the plan will create more economic growth for them, and thus more tax revenue. “We want to make sure municipalities and local governments are kept where they are,” he said. “And any growth will come from economic opportunity.”

Other ideas being considered:

• The nonprofit sales tax exemption could be capped for the first three years in declining amounts before being eliminated in the fourth year.

• The much ballyhooed small business tax break on the first $50,000 in income – which came under scrutiny but lawmakers defended – may end after this year.

• Business-to-business transactions would not face an expanded state sales tax and capital purchases would also be exempted. Other current business exemptions may continue, largely in the manufacturing and agriculture industries.

• The new Working Families tax break could range from $8,000 to $4,000 depending on income for those making between $30,000 and $75,000, with the amount diminishing as income rises. It would last two years before expiring.

• Most existing tax credits would end at the end of the year, but the renewable energy credit and the cigarette export credit could continue for a couple years.

• State and local privilege taxes could expire in 2015, but municipalities may keep a small privilege tax with a cap.

• The franchise tax would likely extend to limited liability companies (LLCs) in 2015. It could be capped at $5,000 and those with limited revenues would pay only a $500 minimum.

Rucho, who is helping lead the effort, said the legislation is still in draft form and nothing is certain about the bill. But potential components of the plan are emerging from conversations with lawmakers, lobbyists and experts.

“We still have some adjustments that need to be done,” Rucho said, cautioning that the bill has gone through “100 iterations” at this point. “There is nothing in rock and stone right now.”

Butterfield basks in Bermuda

U.S. Rep. G. K. Butterfield will be holding a political fundraiser along the coast – well, actually, way off the coast, in Bermuda.

Butterfield, the Wilson Democrat, plans a fundraiser for Friday through Sunday at the Fairmount Southampton in Bermuda, reports the Sunlight Foundation. Cost is $2,500.

Back in the USA, Sen. Richard Burr, a Republican from Winston-Salem, held a fundraiser Monday at the Robert Trent Jones Golf Club in Gainesville, Va., for his Next Century Fund political committee. The cost for the outing ranged from $1,000 to $2,500.

Carson speaking in Raleigh

The newly minted conservative TV pundit Dr. Ben Carson will speak at the Raleigh Convention Center June 27. The event is hosted by state Rep. Jim Fulghum, a Republican from Wake County, and his wife, along with the Civitas Institute. It will benefit Upper Room Community Scholars Program, which is run by Rev. Patrick Wooden, an outspoken minister.

The top ticket goes for $35,000 and includes a small roundtable with Carson at a VIP reception, dinner for 20 and seating for two with Carson, among other things. Individual tickets are $250 per person.

Staff writers John Frank and Rob Christensen

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