Income tax All three plans would flatten and lower the state's current three-tiered marginal income tax system:House Bill 998, sponsored by Lewis, proposes a flat income tax of 5.9 percent.Senate Bill 677, the Rucho plan, would drop the rate to 4.5 percent by 2016. Senate Bill 394, the Clodfelter plan, proposes a flat tax of 5.95 percent.All three would also cut the state's corporate tax rate, currently at 6.9 percent:The House plan lowers the corporate rate to 5.4 percent by 2016; the Rucho plan lowers it to 6 percent by 2016; and the Clodfelter plan drops it to 5.95 percent by 2014. Both Senate plans would make changes to existing tax law to favor companies with significant real estate or equipment in North Carolina. The Lewis plan does not.The Rucho plan also carves out sales tax exemptions for many, but not all, business-to-business transactions.Sales taxThe current state sales tax is 4.75 percent, with an additional 2 percent (or more) that goes to local governments. The combined sales tax rate throughout most of the state is 6.75 percent. All three plans lower the effective sales tax rate slightly but expand it to apply to more services. The House plan would keep the state portion of sales tax at 4.75 percent but would lower the local portion by 0.1 percent. Local governments would have to find the lost revenue elsewhere.The Rucho plan would lower the overall sales tax to 6.5 percent but would do so by raising the state's portion to 5 percent while lowering the local portion to 1.5 percent. Again, local governments would have to find the lost revenue elsewhere. The Clodfelter plan would lower the state's portion to 4.5 percent, lowering the overall rate to 6.5 percent. New taxesThe Rucho plan would apply sales tax to prescription drugs, which are not currently taxed. It also raises the tax on groceries from 2 percent to the full 6.5 percent. The House and Clodfelter plans do not change the taxes on prescriptions or groceries.The House plan and the Clodfelter plan would, in most cases, expand sales tax only to the installation or servicing of tangible material goods, like car repairs, computer warranties or furniture delivery.The Rucho plan would expand the sales tax to apply to an additional 130 to 160 services by 2016, covering almost every service that is taxed in at least one other state.Personal income tax deductionsThe House plan includes a standard income tax deduction of $12,000 for a married couple filing jointly or itemized deductions (mortgage or charitable) up to $25,000. The Rucho plan would offer a tax-free bracket of up to $12,500. It also includes a sliding tax exemption for married joint filers making between $30,000 and $80,000. The Clodfelter plan offers a new "household" deduction of up to $5,000, as well as a "housing expense allowance" of up to $10,000 of mortgage interest. It caps deductions for charitable contributions. The House plan raises the child tax credit from $100 to $250. The Rucho plan leaves it at $100. Clodfelter's plan doesn't specify. Cost to the stateThe House plan would cost the state an estimated $353 million over the coming two-year budget cycle.The Rucho plan would cost an estimated $770 million over the coming two-year budget cycle. The Clodfelter plan would actually bring in additional revenue, creating an estimated reserve of $652 million in the coming two-year budget cycle. Other items of interestThe Rucho plan would remove tax exemptions for nonprofits and charities. It also would charge state income tax on Social Security benefits that are subject to federal taxes. That most often occurs when a retiree has multiple sources of income.The House and Rucho plans would repeal the Energy Star tax holiday program on appliance purchases.All three plans would add sales tax to movie and entertainment tickets, although the House plan keeps some current exemptions.
Legislative Update by EDPP Vice Chair Jeremy Browner
OCBA Legislative UpdateBy: Jeremy Todd Browner, Esq.June 5, 2013
Agenda• 2013 NCGA Stats• NC Tax Reform Proposals• NC Senate Proposed Court Budget• Session Law• Bills sent to Governor• Bills that met crossover deadline
2013 NCGA Long Session• 1738 Bills Introduced• 437 House Bills Meet Crossover• 213 Senate Bills Meet Crossover• 38% of Introduced Bills meet Crossover• 45 Chaptered Bills to date• Usually about 20% of introduced bills pass
SL 2013-35Increase Child Abuse Penalties• An Act to increase the penalty for variouscriminal offenses of felony child abuse and torequire that the official record of a defendantconvicted of child abuse or other assaultsagainst a minor indicates that the offenseinvolved child abuse.
SL 2013-27Adopt Uniform Deployed Parent Cust/Visit. Act.• An Act to adopt the uniform deployed parentscustody and visitation act.
SL 2013-52Caylees Law/Report Missing Children.• An Act to make it a criminal offense to fail to report thedisappearance of a child to Law Enforcement, toincrease the criminal penalty for concealing the deathof a child, to increase the criminal penalty for making afalse, misleading, or unfounded report to a lawenforcement agency or officer for the purpose ofinterfering or obstructing an investigation involving amissing child or child victim of a Class A, b1, b2, or cfelony, and to make it a Class 1 misdemeanor for aperson to fail to report theabuse, neglect, dependency, or death due tomaltreatment of a juvenile or to prevent anotherperson from making such report.
SL 2013-18Incapacity to Proceed Amendments• An Act to amend the laws governingincapacity to proceed.
SL 2013-17Cancel Aircraft Lien w/ Surety Bond• An Act to require the cancellation of anaircraft labor and storage lien when a suretybond in an amount equal to one andone-fourth times the amount of the lienclaimed is deposited with the clerk of court.
SL 2013-53Prohibit Expunction Inquiry• An Act to clarify the law pertaining to administrativeaction that may be taken by an occupational licensingboard as a result of expunged charges or convictionsunder G.S. 15A-145.4 and G.S. 15A-145.5; to prohibitan employer or educational institution from requestingthat an applicant provide information regarding anarrest, criminal charge, or criminal conviction of theapplicant that has been expunged; and to require astate or local government agency to advise anapplicant that the applicant is not required to discloseinformation regarding an arrest, criminal charge, orcriminal conviction of the applicant that has beenexpunged prior to requesting disclosure.
SL 2013-34HOAs/Lim. Com. Elements/Amend of Declaration.• An Act providing that a unit owner in a condominiumand a lot owner in a planned community shall affordaccess through the limited common element assignedor allocated to the owners unit or lot to theassociation and, when necessary, to other unit or lotowners for the purpose of conductingmaintenance, repair, or replacement activities andproviding that a unit or lot owner is legally responsiblefor damage to a limited common element caused bythe unit or lot owner and clarifying the laws regardingthe powers and duties of a planned community andamending the procedures regarding amendment of arecorded declaration.
SL 2013-47Lilys Law.• An Act to codify the common law that it ismurder where a Child who is born alive dies asthe result of injuries inflicted prior to thechilds birth, and to provide that the act shallbe entitled "lilys law."
SL 2013-33Sex Trafficking/Sex Offender Registration• An Act to add the offense of human traffickingto the list of criminal convictions that requireregistration under the sex offender and publicprotection registration program.
SL 2013-42Name Change Req. For Minors• An Act to clarify certain name changerequirements and authorize a parent to applyfor a name change for a minor child withoutconsent of the other parent if the otherparent has been convicted of certain criminaloffenses against the minor child or a sibling ofthe minor child.
S210Authorize Chief Magistrates• An Act to provide for the appointment of chiefmagistrates.
S239Amend NC Business Corporation Act• An Act to make various revisions to the NorthCarolina business corporation act.
S279Estates/Trusts/Guardianship Amendments• An Act to update and clarify provisions of thelaws governing estates, trusts, guardianships,powers of attorney, and other fiduciaries.
S252Increase Penalty/Controlled Substance Crimes.• An act to increase the criminal penalty forcertain violations of the controlled substancesact.• If an employee of Heath Care Providers stealcontrolled substances, it’s a Class G felonyfrom a Class 1 Misdemeanor
H774Building Code Exclusion/Primitive Structures.• An act to exempt certain primitive structuresfrom the building code.• Primitive Camp• Primitive Farm Buildings
H813Ban Synthetic Cannabinoids.• An act to make themanufacture, possession, sale, use, anddelivery of all synthetic cannabinoidsunlawful.
H142Provide Access to Campus Police Records.• An act to provide public access to certaininformation maintained by campus policeagencies affiliated with private, nonprofitinstitutions of higher education.
S489Consumer Finance Act Amendments• Increases the maximum loan amount from $10,000 to$15,000• Allows consumers to defer payments at a cost of 1.5percent of whats owed that term• Allows $15 late-payment fees• Interest rates for loans of up to $10,000 currently stand at30 percent for the first $1,000 and 18 percent for theremainder of whats owed.• The amended bill would charge 30 percent interest for thefirst $4,000, 24 percent for the next $4,000 and 18 percentfor the remainder of the principal.• Those rates previously stood at 30 percent for the first$5,000 and 24 percent for the next $5,000.
S634INCREASE PENALTIES/UTILITIES THEFT.• An Act to increase the criminal penalties forinterference with gas, water, or electric lines.• 1st Offense Class 1 Misdemeanor• 2nd Offense Class H Felony• Significant property damage or public dangerClass F Felony• Death of another – Class D Felony• Treble Damage or $5,000 which ever greater
H343Court/Procedure and Fee Amendments• An Act to eliminate arbitration caps in districtcourt, to make clarifications to court fees, toamend the motion fee exemption, to requirecounties and municipalities to advance fees, andto provide priority for the payment of criminalcosts and fees.• Motion Fee when filing Notice of Hearing• Fee for 3rd Pty Complaints• No motion fee for exemption motion• Motion Fee Changes effective July 1, 2013
H407Trustee-Atty Fee/Foreclosures/Clerk Approval.• An act to authorize clerks of superior court todetermine the reasonableness of counsel feespaid to an attorney serving as a trustee in apower of sale foreclosure proceeding.
S452Jurisdictional Amts/Arbitration/ Sm Claims Ct.• Small Claim from $5,000 to $10,000• District Court from $10,000 to $25,000• Arbitration Cap from $15,000 to $25,000• Atty Fees to Appellee if Decision is affirmed onappeal with District Court Arbitrator• Effective to actions filed on or after 7/1/2013• Calendared for yesterday in House
S182Limit Appeals to Superior Court• An Act to eliminate appeals for infractions, tomodify appeals to the superior court inprobation revocations in which the defendanthas waived a hearing, to amend the lawpertaining to resentencing upon the reversalof a sentence on appellate review, and toreclassify certain misdemeanors as infractions.
S439Amend & Restate NC Limited Liability Co. Act.• An Act to amend and restate the NorthCarolina limited liability company act and tomake other conforming changes.
H331HOAs/Uniform Lien Procedure• An Act to stabilize titles and to provide auniform procedure to enforce claims of liensecuring sums due condominium and plannedcommunity associations.
H762Amend Certain Bail Bond Procedure• AN Act to amend various proceduralrequirements regarding bail bonds.
H597Bail Bondsman Credentials/Official Shield• A Act to provide that official credentials of abail bondsman shall include an official shieldand to provide for the design of the shield.
S584Amend False Liens Law• An Act to expand the protection against falseliens to include the immediate family of apublic officer or public employee.• Immediate Family is defined as spouse or child
H809Game Nights/Nonprofit Fundraisers.• An Act to authorize nonprofit organizations tooperate "game nights," to provide for theregulation of nonprofit organizations holding"game nights," and to allow the consumptionof alcoholic beverages at "game nights.“• 5 Years in Existence and a 501(c)3,4,5,or 6 org.
S409Amend Civil No-Contact Laws• An Act to amend procedures and to providefor costs and attorneys fees in civil no-contactorder cases.
H384Amend Definitions/Prop. Classif/Equ Dist.• An Act amending the definition of maritalproperty to provide that entireties property issubject to the same burden of proof inrebutting the presumption as all propertyclassified as marital property and amendingthe definition of divisible property to clarifythat increases and decreases in marital debtmeans passive increases and passivedecreases in marital debt under the lawspertaining to equitable distribution.
S630Evidence & DNA Expunction Laws• An act to amend the laws regardingdisposition of blood evidence, admissibility ofreports after notice and demand, andexpunction of DNA samples taken upon arrest.
H25Amend Felony Breaking or Entering• Adds to felony offense: Any person whobreaks or enters any building with intent toterrorize or injure an occupant of the buildingis guilty of a Class H felony.