A guide to the calculator

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Revenue totals for each county are provided in a box above the graph that depicts the sum of the revenue streams available to a county over time (each stream is color coded). Also depicted in the graph is a simple projection of future increases in annual per capita income for each county.

As you make changes to a tax rate or - in the case of the sales tax - to the tax base, a new revenue total is estimated below the existing revenue total. The graph changes accordingly.

All the results shown are estimates, based on audited reports from the 2005-06 fiscal year. The goal is to illustrate trade-offs. The calculator cannot provide precise predictions.

Property Tax
The primary revenue source for county government in North Carolina is the property tax. The current rate is given in cents per $100 of assessed value. As you alter the rate in the calculator, total revenues change accordingly. The calculator uses property tax and other local data from the N.C. Department of the Treasurer to estimate the impact of a change in the property tax rate.

Sales Tax
The second largest source of county revenue is the retail sales tax. The retail sales tax is levied upon most tangible goods and a few services, and it is imposed and collected by vendors at the point of sale. The current sales tax in North Carolina is composed of two parts, one paid to the state and one paid to local government. For the 2005-06 fiscal year, the county share of the sales tax was 2.5 percent (or 3 percent in Mecklenburg County).

As the U.S. economy has shifted from a manufacturing to a service economy, the sales tax base – what products are being taxed – has shrunk accordingly. Nationally, states are looking at services as an important component of a 21st Century economy. If services are added, the sales tax base can be expanded, overall rates can be lowered, the presumed regressive nature of the sales tax would be minimized.

The following options or choices can be made: The sales tax rate, for both per capita and point-of-delivery shares of the distributed revenue, and the types of goods taxed - for example unprepared food, healthcare, entertainment, professional services, construction, prescription drugs, rental services, and all other exemptions.

Some combinations will have opposing effects. For example, taxing healthcare would cause sales tax revenue to grow very quickly. Taxing food would cause sales tax revenue to grow more slowly. However, both choices increase revenue and that effect could be used to lower the overall rate.

Explanation of sales tax base sectors
Healthcare includes physicians, dentists, optometrists, chiropractors, therapists, ambulatory services, nursing and residential care, etc.
Entertainment includes performing arts and sporting events, and amusement and recreation services such as roller skating, bowling, miniature golf, etc.
Professional services include activities that require a high degree of expertise and training, such as legal advice and representation, accounting, architectural and engineering design, computer services, photographic services, advertising services, veterinary services, etc.
Construction includes construction of residential, industrial and commercial buildings; heavy and civil engineering construction such as water and sewer systems, oil and gas pipelines, highways, streets and bridges, and land subdivision; and specialty contracting services such as roofing, masonry, plumbing, flooring, etc.
Rental services include real estate and property management, motor vehicle rentals, etc.
Other services include equipment and machinery repair, dry cleaning and laundry services, photofinishing, dating services, advocacy, etc.

For a more thorough explanation of services by industry sector, visit the U.S. Census Bureau's Web site at www.census.gov/econ/census02/data/us/US000.HTM.

The sales tax component of the tax calculator uses 2005-06 sales tax data from the N.C. Department of Revenue and consumer spending data from the Bureau of Economic Analysis at the Department of Commerce.

Additional Revenue Options
Several additional local revenue options are included in the calculator: An impact fee levied on each new home, a real estate transfer tax imposed on the sale of any real property, an additional prepared food and beverage tax, and an occupancy tax. The results of each combination are shown graphically.

Note: Your computer may require that you download and install Adobe Shockwave Player to run the calculator. To download, click here.