A statewide public policy advocacy group met at Ashe County Library on Wednesday to conduct an outdoor forum, mainly discussing a tax credit that costs North Carolina $336 million in revenue.
The advocacy group is called Progress North Carolina Action, and Ashe County is only one stop on their tour called “Politicians Gain, Schools Lose Tour.” The focus of the tour has been on who actually benefits from the tax credit and the state’s cuts in education.
“The News & Observer called this loophole one of the biggest tax cuts in the last decade,” said Gerrick Brenner, the executive director of Progress North Carolina Action.
Progress North Carolina Action also took aim at Rep. Jonathan Jordan of Ashe, who voted for North Carolina’s current budget, of which this tax credit is a part.
The tax credit allows a business to be tax-exempt for the first $50,000 it makes on non-passive income, which equates to a savings of $3,500 for every business that applies for the tax credit.
The tax credit can be acquired by any business that does not trade stock.
Brenner said the tax credit was advertised as a small business tax credit. However, a business of any size that doesn’t trade stock can qualify and benefit from the tax credit.
This includes law firms, special interest groups, and private medical practices.
“Tax rates aside, the main issue we have is accountability. Calling this a small business tax credit was a gross misrepresentation,” said Brenner.
Brenner also said, “This credit is not what people thought it was; it’s a loophole for all kinds of special interests.”
Jonathan Jordan responded by saying the tax credit was focused on helping smaller businesses. That is why this tax credit was classified as a small business tax credit. Jordan also said this tax credit allows for “a level playing field.”
“Philosophically, I have a problem with allowing one business to get a tax credit and not another,” said Jordan. He also said, “Businesses of all sizes hire employees, so we were trying to make it easier for all North Carolina businesses to hire workers.”
Jordan said the approval of the state budget was not a partisan vote. According to Jordan, the state’s current budget was also voted on by four or five Democrats who see the value of lowering taxes on businesses during this economic period.
In addition to the tour, Progress North Carolina Action is passing around a petition. The petition asks representatives who voted for the current budget if they will profit from the tax credit.
One of the other focuses of the gathering was the state’s legislature cutting funding for education.
Brenner said the state legislature has cut around one billion dollars from the education budget in the past two years, with most of those cuts being implemented last year.
According to Progress North Carolina Action, the following educational tools could have been purchased with the $336 million lost in state revenue due to the small business tax credit:
• The state could have hired 5,500 more teachers.
• The state could have purchased six million new text books.
• The state could have enrolled 67,000 more children into Pre-K.
• The state could have purchased an iPad for every middle school and high school student in North Carolina.
Progress North Carolina Action continued their tour by going to Asheville on Thursday, and they will be visiting Burke County and Fayetteville over the weekend.
There are claims and counter claims about the impact of tax changes. I was there. Let me set the record straight. The NC Budget includes a tax cut for small business. It is easy and straight forward, if you file a personal tax return with earned income from a small business or profession, the first $50,000 is exempt from NC Income Tax. That’s it, it is just that easy.
So who gets this tax break? Barbers and Stylists who rent a chair in a salon and the owner of the salon all qualify. So do real estate agents, home repair contractors, the driver who owns his truck. The moms who sell Mary Kay or Tupperware for extra money, or keep children in their homes for other mothers who work all qualify.
So does your independent insurance agent, your financial planner, and the landscaper who mows your grass and seeds your lawn this fall. Anyone who works for himself/herself and is paid by the job or by what is produced files a schedule C for earned income and gets this break.
People who make less than $50,000 get 32% of the benefit of this tax cut, 57% of the benefit goes to small businesses with incomes of $100,000 or less. The $100,000 is not how much the owner takes in pay, it is how much the whole business earns. So profits that are reinvested in the business are included in this taxable income.
Millionaires get 2% of the benefit, and, since they run a business, they are included. We Republicans are hopeful we can help some of the bottom 32% (less than $50,000) become millionaires, and move into the top 2%.
Thom Goolsby, NC Senator
If the tax loophole is so great, why did the NC Senate dodge a vote on the matter?
http://www.newsobserver.com/2012/06/13/2135344/gop-maneuvers-to-avoid-vote-on.html
Nobody is arguing against help for small businesses, but to vote for a tax giveaway to lawyers like yourself while at the same time cutting public education to the bone is something North Carolina voters find deeply troubling.
Justin Guillory
Progress NC Action
Current state lawmakers like Rep. Jordan and Sen. Goolsby cut almost $1B from education and delivered a gaping tax loophole for big business, lawyers, lobbyists, and even some lawmaker themselves.
Will Sen. Goolsby profit from this loophole? Rep. Jordan?
The public and voters deserve to know if Jonathan Jordan plans to personally benefit from this gaping loophole.