Small businesses. They are responsible for over 60 percent of job creation. They are like puppies. Everyone loves them. Even liberals who demonize business have to pretend to like small businesses. Yet in North Carolina, one of the top battleground states of the 2012 election, Democrats have put up a gubernatorial candidate whose policies would sock it to small businesses.

Lt. Gov. Walter Dalton, the Democratic nominee for governor, has announced his support for out-going Gov. Bev Perdue’s proposed sales tax hike. What the Dalton campaign is hoping voters don’t hear about, and the media ignores, is the disproportionate harm that sale tax increases have on small businesses.

A survey that was the first national measure of retailers’ sales tax compliance costs was conducted by PricewaterhouseCoopers in 2004. The report found that retailers with less than $1,000,000 in annual sales were burdened with sales tax compliance costs in excess of 13 percent of sales tax collected. Meanwhile, the big guys – retailers with income between $1,000,000 and $10,000,000 – had average compliance costs of less than six percent. The really big boys, retailers with more than $10,000,000 in sales, had compliance costs that were less than three percent on average.

That’s the problem with raising the sales tax. It most adversely impacts the little guys, both consumers and employers. Why then, with an unemployment rate well above the national average, is Walter Dalton seeking to disproportionately harm and reduce the job-creating capacity of employers who provide the lion’s share of jobs in the Tar Heel State.

That’s a good question and one that would be great for a moderator to ask in the first gubernatorial debate. 

Posted by Patrick Gleason on Tuesday, June 5, 2012 5:05 PM EDT

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