May 6, 1999
Hon. James Black VIA FAX TO #715-0772
Speaker of the House
Re: Extra Sales Tax for Counties
Dear Mr. Speaker:
Since the 1986 Tax Reform Act sales tax is no longer deductible against federal income tax while property taxes remain deductible. That means that shifting local financing from property tax to sales tax results in lots of money going to Uncle Sam.
I have read that you have recently told the County Commissioners that you will not support extra sales taxes this Session. I commend you for that. I attach some fiscal information from Dave Crotts which will assist you in explaining to the County Commissioners why this is a bad idea in addition to all the other good reasons that you have already given them.
If Wake County raised $100 million in sales tax it would result in an extra $15 million going to Uncle Sam from Wake County residents. This means that the "transactional cost" for this type of tax is about 15% whereas the transactional cost of a "good tax" should be 1 to 2%.
With best regards, I am
STAM, FORDHAM & DANCHI, P.A.
Paul Stam, Jr.