NC Tax Scheme Will Increase Unemployment

The North Carolina legislature is about to pass a Billion Dollar tax “scheme” spear-headed by Governor Bev Perdue. Similar plans have passed both the houses of the General Assembly and is now in committee for compromise. The tax plans many flaws. Here are two.

Nexus Language for Online Advertising.

Part of the new law includes nexus language for online advertisements. In essence this means that if someone in North Carolina runs an online advertisement and you purchase something from a company in another state, you still have to pay North Carolina sales tax.

An online marketer (affiliate marketer) is nothing more than an advertising company. Online marketers run advertisements, and are paid when that advertisement results in a sale. This advertising revenue is already taxed as income for the online marketer.

Does the News & Observer have to collect sales tax because you decided to purchase something based on an ad you found in the Sunday paper? Does G-105 have to collect sales tax because you ordered something you heard about on the radio? Does Time Warner cable have to collect sales tax because you bought something you saw on QVC? Does the kid down the street making $6 an hour to put fliers on your mailbox have to pay sales tax if that flier prompts you to make a purchase?

Of course the answer to all of the above is NO, but that is exactly what the legislature and Governor Bev Perdue are proposing for online advertisements. And it will drive people in our state out of work. Amazon.com has closed their affiliate program and suspended all North Carolina participants as of today (June 26, 2009). Other companies will follow suit. Over the past year as unemployment rose and the economy suffered, many people like myself have turned to online marketing as a means to supplement or completely replace their previous incomes. Yet the State of North Carolina has chosen to put us out of work… again.

An online marketer runs an ad, nothing more. They don’t facilitate the transaction, process the credit card, deliver the goods, or provide customer service. They run an ad and are paid on that ad’s performance. They don’t see the payment nor do they even see the details of the transaction. They don’t know who the purchaser was, where they live exactly, and may not even know all that the person purchased. Yet law makers who don’t understand online marketing and have likely never run a business of their own are going to pass a law that requires the marketer to collect sales tax. The result won’t be increased revenue for the state, it will only be a loss of income for its citizens. Amazon.com was only the first to pull out, but it won’t be the last.

The Services Tax.

Another part of Bev Perdue and the legislature’s tax scheme is a services tax. Up until now, sales tax was collected on the transfer of physical goods and some specific services, but virtually all services were treated as not taxable at the point of purchase (individuals and companies have always had to pay income tax on the revenue). That will all change if this tax scheme is signed into law.

Get a hair cut? You will have to pay Sales Tax on the service.
Get your car worked on? You will have to pay tax on the labor.
Have your roof replaced? You won’t just pay Sales Taxes on the materials, you’ll pay Sales Taxes for the workforce too.
Buy an extended warranty? Yup, they want to put a Sales Tax on that as well.
DirectTV installed? Sales Tax on installation.
UPS or FedEx delivery? Sales Tax on the service.
Does a neighborhood kid cut your grass? He’ll have to collect Sales Tax too.

This change will have a fundamental and dire impact on our already hurting economy. Think North Carolina’s unemployment rate is high now? You haven’t seen anything yet.

North Carolina has a large number of builders, many of whom were hit hard with the mortgage and economic crisis over recent years. Of those that have survived, many turned to remodeling work to keep the business flowing. But with this new tax, the cost of the same home repairs will increase by hundreds or thousands of dollars. When the same work costs substantially more, do you think as many North Carolinians will be able to afford to have it done? What about when that car repair or oil change costs more, or when your business has to pay more for the same delivery service? Will that negatively impact the bottom line?

This tax scheme is a money grab by irresponsible legislators who have been abusing their powers and misusing our money for years. And instead of cleaning house, reworking their books and living within their means like the rest of us… they are going to hurt the citizens of the state even more and make the economic picture for working North Carolinians even more bleak.

As a banking state, we were hit hard by the mortgage collapse. With the number of home builders in the state, we were hit even harder. Most of the people I know from business lost their jobs over the past two years, but for the most part it was confined to the financial and housing industry. Now no one is safe. Car repairmen, handymen, hair stylists, delivery people, advertisers, online marketers, and anyone who provides a service or runs a business is about to see their costs go up. Can you afford for your costs to increase right now? Can your employer?

The Bottom Line.

We are all trying to do more with less… so when the state sticks its hand out and takes even more money from you, what do you think the end result will be? More loss of jobs? More closed businesses? More homes falling into foreclosure?

The people running this state have been corrupt for years. Just look at corruption convictions and/or investigations of Jim Black, Meg Scott Phipps, Governor Easley & his wife, etc. Think about how they passed the lottery in the dead of night and the number of people who were charged or convicted of ethics violations after the fact. These people have been more concerned with their own political gain, personal wealth, and power for years. And the end result is an economy that is hurting with an unemployment rate higher than the national average. Their solution is more than a Billion Dollars in higher taxes on the already burdened citizens of this state, costing thousands more North Carolinians their businesses and their jobs, and putting the squeeze on us all.

Enough is enough. Please take a stand and call your legislators and your Governor. This scheme is going to cost my family much of our household income. What about you? What about your neighbor? What about your employer? What about the next time you need home repair or work done on your car? Aren’t we all hurting enough?

Take Action.

Help stop another burdensome tax increase in North Carolina. Make your voice heard.

Find your NC local representatives here.

Other Contact Information.

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