Raising taxes on wage earners and small businesses seems to be the tune most opponents of a free market system like to sing as of late. A tune that the typical taxpayer doesn’t care to hear. Members of the General Assembly have recently proposed a tax hike that would affect many people and businesses. And this tax increase comes at a time when North Carolina is 47th in the nation in unemployment, at a rate of 9.4 percent.
H1166, “Temporarily Raise Income Tax on Millionaires,” sponsored by Reps. Paul Luebke (D-Durham), Frank McGuirt (D-Union), Larry Hall (D-Durham), and Pricey Harrison (D-Guilford), raises the top marginal income tax rate on individuals making $600,000 or more and married couples filing jointly earning $1 million or more from 7.75 percent to 8.5 percent. The new rates would be effective in 2012 and 2013.
This income tax increase is a clear attack on those who earn more, singling them out simply because their income, which most work extremely hard for, is higher than someone else’s. And it’s important to recall that most North Carolina businesses file their business earnings within these income tax brackets. Such tax increases will have a profound effect on the health and viability of many smaller businesses.
Because business owners expect a certain rate of return on their time, money and effort, a lower rate of return courtesy of a higher tax rate will discourage economic growth. On the margins, businesses will decide not to expand, or potential entrepreneurs will hold off on starting a new company.
Such a tax increase will provide a negative incentive on businesses at a time when North Carolinians desperately need more business investment. North Carolinians are still feeling the burden of this recession, which is why H1166 is the “Bad Bill of the Week.”