Liberal groups protest GOP tax changes as filing deadline looms

With Monday’s deadline for filing income tax returns fast approaching, several liberal advocacy groups want to remind taxpayers that some of them will pay more this year under Republican-led tax changes.

Progress N.C. Action held a news conference Thursday at the Legislative Building to criticize Republican lawmakers’ decision to eliminate certain tax deductions, lower corporate income tax rates and expand sales taxes to more services, such as car repairs.

“Gov. McCrory says that he has lowered taxes, but based on this list here, that’s just not true,” Progress spokesman Logan Smith said, pointing to a list of new sales taxes that started last month. “Gov. McCrory has raised taxes on working families.”

The state budget approved last year will drop the personal income tax rate from 5.75 percent to 5.499 percent in 2017. And the standard deduction will increase, meaning a married couple filing jointly won’t owe income taxes on their first $15,500 in income, up from $15,000.

Those changes will result in savings of about $50 or less for households with less than $30,000 a year in income, or about 10 percent of their tax burden, according to legislative projections. Meanwhile, new sales taxes began March 1 on car repairs and other repair, maintenance and installation services where contractors already charge sales taxes on parts.

“This tax swap shifts the burden away from those who can most afford it onto those who can least afford it,” said Tazra Mitchell, a tax policy analyst at the liberal N.C. Justice Center. “That’s not how you build an economy that works for all.”

In response to Thursday’s event, the N.C. Republican Party issued a statement praising the GOP’s approach to taxes.

“Gov. Pat McCrory and the General Assembly have instituted historic tax reform that has grown the state’s economy, brought more business to the state and put money back in the wallets of hard-working North Carolina families,” executive director Dallas Woodhouse said.

Democrats argue that many taxpayers aren’t seeing it that way. They pointed to a recent poll from the left-leaning firm Public Policy Polling that found that 54 percent of voters believe their state taxes have increased in recent years – while only 9 percent said their state tax burden has decreased and 32 percent didn’t notice a change.

“The tax raises today are just incredible,” said Jan Fagerberg, a Raleigh small business owner who spoke at the news conference. “We cannot afford all this.”

Republican lawmakers plan to consider more income tax cuts when the legislature returns in late April. One option that has been proposed would raise the standard deduction for personal income taxes by $2,000, a move that could save taxpayers up to $115 per year.

But Sen. Terry Van Duyn, an Asheville Democrat, said that approach won’t help the working poor.

“I laud a larger standard deduction, I think that’s a great idea, but it’s just not enough when you’ve got so many people working for low wages,” she said Thursday. “We have too many folks who can’t even use their standard deduction, because they’re working but not making enough.”

Van Duyn said legislators should restore the earned income tax credit, which Republicans eliminated in 2014.

“(Taxpayers) could use that little boost they’d get from the earned income tax credit to do things like get their cars fixed, especially now since that’s more expensive” with sales taxes added, she said.

This story was originally published April 14, 2016 at 2:49 PM with the headline "Liberal groups protest GOP tax changes as filing deadline looms."