Raleigh

If you're like most North Carolinians, you paid less in state and local taxes in 2008 than you did in 1994.

I know what you're thinking. No way. They're always raising my taxes. They did it again last year.

And you're right, kind of.

Those darn tax rates always seem to be rising, whether it is the county commissioners raising the property tax or the legislature jacking up the sales tax and personal income tax.

But while the rates are rising, the percentage of people's incomes that is going to state and local taxes isn't.

According to the Washington-based Tax Foundation, on a per capita earnings basis, North Carolinians paid an average of 10.3 percent of their income to state and local taxes in 1994. In 2008, the percentage was 9.8 percent.

The percentages can be looked at a few ways.

Rising earnings are probably one part of the explanation. While income taxes might capture the same percentage of earnings, sales and property taxes might not.

The bigger factor may be the legislature's decision during the late 1990s to eliminate the state portion of the sales tax on unprepared food.

But there's another reason that state and local taxes, measured as a percentage of income, have remained relatively stable even as some rates rise: The tax base is eroding; technology, particularly Internet-based sales, have accelerated the erosion.

Last year, North Carolina legislators took one step to try to slow that erosion.

They started taxing digital downloads, reasoning that someone who buys computer software by digital download over the Internet ought to pay the same sales tax as someone who purchases the same software by grabbing a disc at the local Best Buy.

The Fayetteville Observer recently reported that some companies, like Apple, have accepted the change and begun collecting the taxes. Others, like Amazon, have refused.

The dispute is likely to end up in the courts.

The taxing of downloads, though, is just one part of a larger debate about the taxing of all Internet purchases.

For years, state governments have been trying to get Congress to go along with their efforts to require Internet vendors to collect sales taxes based on the state of the purchaser. Congress, of course, only likes taxes when it gets to spend the money.

Vendors like Amazon, consumer champions of a tax-free Internet and various tax protest groups argue that Internet shouldn't be shackled with the sales taxes.

Online purchases lessen pollution and lessen the need for government services, they argue.

But is that fair to the local merchant with a brick-and-mortar store down the street who has to collect the taxes?

Is it fair to the elderly woman on Social Security who neither knows nor trusts computer technology?

The intellectually honest argument for the Internet-free crowd is to do away with all sales taxes in favor of income taxes.

Good luck with that one.

Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at smooneyh@ncinsider.com.