Rep. David Lewis, R-Harnett, said the House tax plan would be easier to administer than the Senate version.
- Tax plans at a glance
INDIVIDUAL INCOME TAXES
Current law: Three individual income tax rates of 6 percent, 7 percent and 7.75 percent. There are standard deductions and personal exemptions that can reduce a filer's tax bill.
House proposal: Reduces rate to flat 5.9 percent in 2014. The standard deduction is essentially doubled for filers, while itemized deductions are retained for home-mortgage interest and charitable contributions and capped at $12,500 to $25,000, depending on filing status. The $100 per-child tax credit increases to $250 for most filers, $125 for the highest wage earners.
Senate proposal: Reduces rate to flat 5.5 percent in 2014, 5 percent in 2015 and 4.5 percent in 2016. The current rate on the lowest-income earners would be reduced from 6 percent to zero percent and ultimately cover the first $15,000 of income by 2017. Most exemptions and deductions are repealed but the child tax credit remains.
Also: Neither the House nor Senate plans would revive the state's portion of the Earned Income Tax Credit, which is set to expire in 2014. Republicans in both chambers seek to eliminate North Carolina's estate tax.
CORPORATE INCOME TAXES
Current law: Corporate income tax rate of 6.9 percent. Tax bills for multistate corporation calculated using complicated formula.
House proposal: Reduce income tax rate to 6.75 percent in 2014. Multistate corporation formula would be narrowed to cover sales only over four years.
Senate proposal: Reduce income tax to 6 percent over three years.. Multistate corporation formula ultimately would be narrowed to cover sales only. Many credits would be eliminated.
Also: Business franchise tax rate of $1.50 per $1,000 would be decreased in both plans. The Senate plan would subject limited liability companies to franchise taxes, too. The House would preserve film production incentives and other low-income housing and R&D credits.
Current law: The combined state and local sales tax rate paid by consumers in most counties is 6.75 percent. North Carolina subjects more than 30 services to sales taxes.
House proposal: Reduce combined sales tax to 6.65 percent. Sales taxes would be expanded to cover warranties and service contracts and installation, repair and maintenance of tangible personal property, including personal automobiles. The sales tax exemption for nonprofit groups and prescription drugs and the exemption on the state's portion of the sales tax on food all would remain in place.
Senate proposal: Reduce combined sales tax to 6.5 percent. The number of services subject to the sales tax would grow by another 100 or so. The sales tax exemption for nonprofit groups would be reduced and those for food and prescription drugs would be eliminated.
Posted: Thursday, May 16, 2013 9:52 pm
Updated: 1:21 pm, Fri May 17, 2013.
RALEIGH - House Republicans offered their own tax overhaul plan Thursday that would reduce personal and corporate income rates like their Senate counterparts but reveals stark differences over the scope of sales tax.
The House proposal would expand the sales tax to cover a handful of new services, such as from automobile repairs to warranty and service contracts. The Senate framework introduced last week, in contrast, would make North Carolina's sales tax base one of the broadest in the country.
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Thursday, May 16, 2013 9:52 pm.
Updated: 1:21 pm.