The details of North Carolina’s tax reform plan have been reported by many news outlets while The John Locke Foundation and other policy think tanks have given their opinions of the plan. One thing is for sure, this tax reform plan is considered by analysts to be the most significant plan likely to be approved in 2013. Both Americans for Tax Reform and the Tax Foundation have commented on the plan using phrases such as, "pretty much blew other states away," "this is the biggest one we’ve seen this year," and "it’s a big step in the right direction."
North Carolina’s tax reform plan has been approved by both chambers and is sitting on the Governor’s desk awaiting his signature. While North Carolina’s tax reform plan has been the center of state policy debate since the elections last year, other things have happened across the country with regards to taxes during that time. The nation is slowly pulling itself out from the economic downturn of the Great Recession, and as states begin to see revenues increase they have taken the direction of reducing taxes to spur economic growth and job creation.
Below are some highlights from other states in the country that have passed tax reform plans while North Carolina has been debating its plan. North Carolina can now join a list of many states reforming their tax codes to be more business friendly and become better stewards of taxpayers’ money.
- Arizona simplified its tax code by reforming their transaction privilege tax, categorized by legislators as "the most complicated sales-tax system in the nation." The law signed by Governor Brewer this summer is not the perfect solution, but it puts Arizona on a path towards a better business climate.
- Indiana approved its budget, and in the process they cut their already low personal income tax, dropped the corporate rate by 1 percent over four years, and repealed the estate/death tax.
- Kansas passed legislation overhauling their tax code by changing a number of tax provisions. The main point was the consolidation of the personal income tax brackets from a top rate of 6.45 percent to a top rate of 4.9 percent. Other positive changes in the tax reform package were the increase in standard deductions, exemptions of certain non-wage pass-through income for small businesses, and the elimination of many tax credits.
- Michigan overhauled its corporate income tax last year by removing the dual corporate tax system and instituting a flat tax rate. They also broadened the base by removing certain tax privileges in the prior system.
- New Mexico passed legislation during the 2013 session to lower their corporate tax rate from 7.6 percent to 5.9 percent over 5 years. They also changed certain high cost tax credits by limiting the state’s film production credit to $50 million annually and limiting requirements for their high wage jobs credit.
- Texas made changes this year to its controversial margin tax. They made the exemption level permanent and slightly decreased the rate. Changes to this tax are being watched closely as Nevada is planning to vote on a margin tax next year.
- Wisconsin was the first state in the country to create a state income tax, and over the years it has grown to include over 20 different income tax credits and five different brackets. The 2013 tax reform package eliminated a majority of the tax credits, reduced the number of tax brackets, cut the income tax rate, sunset the estate tax and made the state’s tax code more consistent with federal tax code.