Carolina Journal’s Barry Smith writes today about the debate over tax reform, and the competing interests and political views at play. It’s a fascinating look at what was destined to be a very difficult but much needed reform agenda. Kudos to all the elected officials who are willing to make important, tough choices that directly impact this state’s economic prosperity.
Sen. Bob Rucho began his presentation of a proposed tax overhaul by asking the lobbyists in attendance at Thursday’s Senate Finance Committee meeting to raise their hands.
Dozens of lobbyists packed into a crowded committee room obliged, bringing chuckles throughout the room.
Pointing out the number of outstretched hands, Rucho, a Mecklenburg County Republican, said, “Members of the committee, I just want you to remember, those are the folks that are in the process of trying to be sure that this tax system stays complicated and loopholes are maintained.
After a collective groan spread across the committee room, Rucho said, “That’s their job.”
Earlier this year, JLF’s John Hood recommended principled tax reform to get North Carolina’s economy back on track.
Ideally, the USA Tax would replace North Carolina’s current retail sales tax, personal income tax, corporate income tax, and estate tax. That would require a USA Tax rate of 8.5 percent to raise the same amount of state revenue. If full replacement of all these taxes proves politically challenging, JLF offers a Plan B: adopt a 6 percent USA Tax to replace current income and estate taxes, and retain the retail sales tax at a somewhat-reduced rate of 4.5 percent.
Plan A would generate a bigger economic benefit for North Carolina, according to an independent analysisconducted for JLF by economists at Suffolk University’s Beacon Hill Institute in Boston. They estimate that replacing current state taxes with an 8.5 percent USA Tax would lead to the creation of more than 80,000 in the first full year of implementation, with thousands of additional jobs created in future years.
But Plan B would be worth doing on its own terms. Adopting a 6 percent USA Tax and cutting the state’s retail-sales tax would generate 10,000 jobs in the first full year of implementation, according to the study.
