The tax would be imposed at a rate of $1.35 per $1000 of the business entity’s net worth tax base, with a minimum tax of $500 and a maximum tax of $5000 on business entities other than corporations and a maximum tax of $75,000 on holding companies. Net worth is defined as the entity’s total assets less its total liabilities computed in accordance with GAAP at the end of the entities taxable year, subject to certain adjustments for depreciation and amortization and to add backs for affiliated indebtedness.
On Friday, the second bill (SB 394) was introduced and is much more comprehensive and does a number of things.
1. Caps personal income tax rate is 6%...currently capped at 7.75%
2. Caps corporate income tax rate is 6%...current rate at 6.9%
3. Franchise tax rate is .001%;
4. Franchise tax is expanded to all business formations except single member LLCs;
5. Franchise tax is not capped for anyone other than Holding Companies (capped at $75,000);
6. Reduces the sales tax to 4.5%. from 4.75%
7. No expansion of services to “professional” services;
8. Taxes charged on property care and maintenance services – think pest control, landscaping, power washing, security services, carpet cleaning, etc.;
9. No additional transfer tax included; Those in place will stand
10. Taxation of short-term rentals remains the same;
11. Charitable deductions are turned into a credit and are limited to $600/year;
12. Eliminates Privilege Taxes charged by cities and counties;
13. MOST IMPORTANT: This proposal appears to eliminate the Mortgage Interest deduction and Local Property Tax Deduction.
NCAR is holding meetings with their leadership, and the consultants to establish an appropriate response and determine the strategy of the Senate leadership. Political Note: the Prime Sponsor of this bill is a Charlotte Democrat, however, Senator Bob Rucho has signed onto the bill as a co-sponsor now, along with several others. Conventional wisdom would tell us that it is highly unlikely the Republicans (who campaigned on Tax Reform) will move a bill through their chamber that has a democratic Prime Sponsor. It is possible/probable that this bill might have been introduced to gauge opposition and a subsequent bill may come shortly afterward. Stay tuned folks, and watch your emails for Calls to Action if and when they are sent.
Thanks to Tara Lightner Robbins of RRAR for this information
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