Tax cut proponents in North Carolina are pushing another plan that would benefit the wealthy at the expense of everyone else, turning their sights to eliminating the state income tax on the sale of artwork, vacation homes and other high-end capital gains that only a few North Carolinians profit from. Contrary to supporters’ claims, this tax cut would not spur economic growth. It would benefit a small number of wealthy individuals and profitable corporations, wasting another half-billion dollars that could otherwise be used to bolster schools, public safety and other things average people rely on each day and that a strong economy needs to thrive. Furthermore, tax breaks for capital gains would make the state tax system even more unfair, pushing more responsibility onto middle- and low-income taxpayers.
Capital gains are profits from the sale of an asset – such as stocks, bonds, investment or vacation real estate, art, or antiques – and are not taxed until the asset is sold. The capital gain is the difference between the selling price and the original purchase price for the asset.
The proposal to eliminate the tax on capital gains is part of a larger push to radically alter North Carolina’s tax system, to the detriment of the state and its residents. State lawmakers passed a tax plan in 2013 that shifted the responsibility of paying for schools, health care and other public investments further away from the wealthy and profitable corporations to low- and middle-income families. The cost of the tax plan is sizable and continues to grow, meaning less revenue for investments that are the foundation for economic growth. For the current fiscal year, which ends June 30, 2015, that tax plan alone could reduce revenue by more than $1 billion.