Over at the mothership, John Hood argues that there’s a good chance it could happen in 2013, if Pat McCrory is elected governor and Republicans retain control of the General Assembly. Hood also lays out some possibilities:
Our goal ought to be to pay for most General Fund spending by taxing consumption. There are three different models to consider:
1. Phase out current income and sales taxes in favor of a flat-rate sales tax on all goods and services sold at retail. That means no individual or corporate income taxes and a state sales tax rate in the 7 percent to 8 percent range at current revenue.
2. Phase out current income and sales taxes in favor of a flat-rate income tax on all household income that is neither saved nor given away to charity. That means no state sales or corporate income taxes, and a consumed-income tax in the 7 percent to 8 percent range. (You’ll notice that the tax base for a consumed-income tax is essentially the same as that of a sales tax. After households save or give away some of their income, they spend the remainder on goods and services.)
3. Phase out only the corporate income tax and keep both income and sales taxes, reforming each to broaden the base and lower the rate. You’d probably end up with a state sales tax rate of about 3 percent and income-tax rates in the 4 percent to 5 percent range.
