Cover Story: NC raising taxes in a recession

By Jeff Atkinson - bio | email

CHARLOTTE, NC (WBTV) - The North Carolina budget on its way to Governor Beverly Perdue's desk.  What does this mean for you?  Higher taxes in the form of an income tax surcharge for the wealthy, a one-cent sales tax hike for all of us... and increases in tobacco, alcohol and other taxes.. altogether totalling $990 million.  Not to mention some serious cuts as well.

This budget is going to have an impact beyond measure.. we're talking politically and financially for the state.

Despite what we may think politicians never like to raise taxes.. especially a billion dollars in a recession.

Political suicide some believe.  Historians and economists call it crazy.  And yet that's what Democrats-- who control the legislature have done.

What will the fallout be?.. Or will there be any??

Raising taxes in a recession.  You can bet Republicans will make hay out of this one.  The state's GOP chairman Tom Fetzer sees blood in the water.. at election time next year.

He says, "We're going to fight the Democrats on this issue. All over the state. We're not going to yield one inch of ground. The Republican message will be.. if we'd been in charge your taxes wouldn't have gone up."

But will average Joe remember?.. after all Americans have a short memory.

And if our economic engine's back on the tracks and humming along.. we may forget how it smells and looks right now..

And forgive those who committed that cardinal sin of thou shalt not raise my taxes.

And it is a long time from now.. the General Election for all 170 members of the House and Senate is a year and three months from now.

Mike Daisley a Democratic Party activist says Democrats will have to frame the debate in terms of what North Carolinians could have lost.. were it not for increased taxes.

Daisley asks, "What prisons do you want closed? What classrooms do you want shut down? How many highway patrolmen do you want cut? Those are all tough choices and unless there's revenue to somehow fund those things then those bad things might very well happen."

Poppycock says Republicans like Pat McCrory.

The former GOP gubernatorial candidate says Democrats in the General Assembly overstated the budget deficit.. didn't cut everywhere they could have cut.. and used scare tactics to force us to pony up.

"These tax increases may mean that jobs will move from here.. 12 miles down the road to South Carolina or to other states.. That's what we should be worried about," says McCrory.

Democrats who control both the House and Senate are getting pummelled right now.

Hundreds of robocalls went out today to budget writers who pushed for higher taxes.

Senator David Hoyle of Gaston county on the receiving end.

He says, "People don't like revenue raises, but they don't like the service cuts either. We just have to find a happy medium.. do the best we can and take the heat as it comes."

He points out Democrats have cut millions of dollars in taxes over the last decade.. rolling back the food tax.. cutting corporate taxes.

Sen. Hoyle says he can sleep at night.

Sleep is something he's not been getting the last two months while they've been trying to balance the budget.

And these don't last forever? they are "temporary" taxes, right?

The sales tax hike has a sunset clause in 2-years June 2011.. legislative leaders told us they're hoping the economy will be better then and these taxes will go away.