Family C: $70,000 in Adjusted Gross Income
Family C consists of a husband and wife with one child, age 8. The federal adjusted gross income is $70,000, all from a small business operated by the husband; the wife is a stay at home mom. Family C contributes $3,000 to the 529 savings plan for college, purchases school supplies and clothing during the tax-free weekend (amount spent = $300), purchases a service agreement (cost = $400) for a new entertainment center, and the three family members attend 3 Hurricanes games (ticket price = $55 each), 1 concert (ticket price = $60 each), 4 movies (ticket price = $6 each), and one circus performance (ticket price = $80 each). The family files a joint return and uses the standard deduction. Charitable contributions amount to $2,500.
| 2013 | 2015 | |
|---|---|---|
| Federal adjusted gross Income | 70,000 | 70,000 |
| Deduction for Contribution to saving fund for college (529 plan) | 3,000 | 0 |
| Deduction for small business income | 50,000 | 0 |
| North Carolina adjusted gross income | 17,000 | 70,000 |
| Standard Deduction | 6,000 | 15,000 |
| N.C. personal exemption allowances | 7,500 | 0 |
| N. C. taxable income | 3,500 | 55,000 |
| N.C. income tax | 212 | 3,163 |
| Consumer use tax | 2 | 37 |
| Income Tax due | 214 | 3,200 |
| Credit for children (100 per child) | 100 | 100 |
| Credit for child and dependent care expenses | 0 | 0 |
| N.C. earned income tax credit | 0 | 0 |
| Credit for charitable contributions for non-itemizers | 77 | 0 |
| Net income tax due | 37 | 3,100 |
| Sales taxes | ||
| – Service agreement for entertainment center | 0 | 27 |
| – School supplies, clothing during tax free weekend | 0 | 20.25 |
| – Tickets for 3 Hurricanes games | 0 | 33.41 |
| – Tickets for 1 concert | 0 | 12.15 |
| – Tickets for 4 movies | 0 | 4.86 |
| – Tickets for 1 circus performance | 0 | 16.20 |
| Total Taxes | 37 | 3,213.87 |
Thus, Family C will see a tremendous increase in its total taxes. In our economy the major job creators are small businesses, but the “McCrory Middle Income Tax Hike” substantially increases the taxes on small businesses.
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