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New NC Tax Laws are Taxing, Say Experts, Businesses

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December 30, 2013

ASHEVILLE, N.C. - A slightly larger pay check is what some North Carolinians will find at the start of the new year, as the state transitions to a flat-rate personal income tax in 2014. There will be new taxes on things like tickets at movie theaters and servicing furnaces and air conditioners.

Alexandra Sirota, director, N.C. Budget and Tax Center, said for many North Carolinians, the tax changes could cost in the long run.

"In some cases, it may be a slight change, but that slight dollar amount makes a real difference for families struggling to get by month-by-month and week-by-week," Sirota said.

Service contracts will be taxed at the general rate of 7 percent and there will be a 4.75 percent tax on tickets to entertainment events such movies and live shows.

Mike Rangel is the co-owner of the Asheville Brewing Company, which also shows movies at a reduced rate of $3. The increased tax amounts to 12 cents per ticket at his theater, which is a cost he'll absorb.

"I can definitely understand the pressure of finding new sources of revenue, but I feel like 4.5 percent in one big jump is a lot for a lot of theaters and entertainment places to take on," Rangel said.

Other theaters reported they will add a surcharge of 50 cents or $1 more per ticket.

Based on her analysis, Sirota said, North Carolina's new tax plan will actually reduce the money available to the state's economy and limit growth.

"What the tax plan actually does is reduce the available revenue to the state, so we will see a reduction in available dollars by almost $650 million, when it's fully implemented," she explained.

Certain tax deductions will also be eliminated starting this year, including the up to $5,000 in deductions allowed for families contributing to their child's 529 college savings plan.

Stephanie Carroll Carson/Mary Kuhlman, Public News Service - NC