There is much to-do over the sales tax expansion going into effect today. Some are even screaming from the rooftops about a “tax increase” So what’s the overall impact, the big picture? Is there a tax increase on North Carolina taxpayers, as some are claiming?

In a word: no. Here’s why….

The expansion of the sales tax base that goes into effect today will cost NC taxpayers $727M over five years. Sounds like a lot, right?

Well, wait a minute. When you take into consideration the tax cuts – in personal income tax, raising the zero tax bracket, further reduction of the corporate tax, and other simplifications of the tax code, NC taxpayers will see an overall reduction in taxes paid. The net tax cuts enacted in 2015? $2.34 B over five years.

And that’s just for the tax changes enacted in 2015. Remember this whole tax cut business started in 2011.

You may recall during budget negotiations in 2011, then Governor Beverly Perdue desperately held on to an increase in the state sales tax. A coalition of new leadership and fiscally responsible democrats at the time overrode her veto and allowed a sales tax increase to sunset resulting in a $1 B (yes, that is a Billion) tax cut for anyone buying stuff in North Carolina. For that year and for every year as long as the rate remains 4.75%.

Then in 2013, the personal income and corporate taxes were cut. The state estate tax was repealed. Sales tax exemptions were repealed, the code was cleaned up and yes, the sales tax was extended to services. 2013 sales tax reforms/changes resulted in $1.9B in additional taxes over five years, while the other 2013 tax changes resulted in a net tax cut of $2.4 B over five years.

Bottom line?

2011 – $1 B reduction in sales tax

2013 – $2.4 B net tax cut FY2013-14 thru FY2017-18

2015 – $2.34 B net tax cut FY2015-16 thru FY 2019-20

Sweet.