Today, the House Finance Committee approved a bill that would end the state’s estate tax:
Republicans repeatedly called the levy a “death tax,” saying it unfairly punishes farm and small-business owners who have passed down wealth generation after generation.
House Majority Leader Edgar Starnes said the tax “punishes productivity.”
“We’ve got people who have worked all their lives to build up a business or a farm,” Starnes said. “They wanted to have something to leave to their children. Why do we want to punish people who are just trying to save something?”
Democrats in opposition to House Bill 101 cited the small number of people impacted by the bill. Rep. Paul Luebke, D-Durham, said repealing the tax would help only 0.2 percent of North Carolinians who would be required to pay the tax.
State law exempts the first $5.25 million of the estate of someone who dies, just like the federal estate tax. Repealing the state’s tax would cost $52 million during the next fiscal year.
The move comes a day after House Republicans rejected a Democratic amendment that would have extended the Earned Income Tax Credit aimed at helping low-income taxpayers.
From the NC Justice Center:
The state EITC provides workers earning low wages with a credit to offset their total state and local tax contributions, said a report released this morning by the Budget & Tax Center, a project of the North Carolina Justice Center. Nearly 907,000 North Carolinians claimed the credit in 2011 in each of the state’s 100 counties. These North Carolinians work, pay taxes, and would be directly affected by the reduction or elimination of this modest but crucial income support.
Even with the state EITC, moderate- and low-income families still pay a greater share of their income in state and local taxes compared to the upper-middle class and wealthy, the report said. Despite this upside-down structure, legislators are considering either reducing the state EITC from 5 to 4.5 percent of the federal credit for tax year 2013 and simply not extending the tax credit past December 2013. A cut in a state EITC or its outright elimination would result in a tax hike on low-earning families.
Worst yet, it could push more North Carolinians into poverty by eliminating one of the state’s most powerful antipoverty tools at a time when North Carolina has the 13th highest poverty rate in the nation, and more than 1 in 4 of its children live below the federal poverty line. The EITC is widely recognized as one of the most effective anti-poverty tools nationwide, especially for children.
Also in the news:
News & Observer – Who’s in and who’s out at NCDOT: an update
News & Observer – NC State Fairgrounds enacts new rules for gun shows