Carolina Journal News Reports
CJ Series

Tax Reform

North Carolina's tax system is more than a half-century old, and talk of updating it to reflect changes in the ways the state collects revenues is expected to intensify in the 2013 legislative session. Several proposals are under consideration, so keep up with the debate by referring to these stories.

(11.24.15) Reforms Are Producing Results
A new report from the Tax Foundation shows how lower, simpler taxes have improved North Carolina's standing among other states and helped families and business owners in the state.

(9.15.15) Budget Deal Includes New Round of Tax Reform
RALEIGH — State taxpayers will pay $400 million less over the next two years if lawmakers pass a $21.735 billion state budget deal announced Monday by legislative leaders. The 2016-17 state budget also expands the sales tax base to include more repair and service work to help offset the tax rate reductions. The bill cuts the personal income tax rate to 5.499 percent beginning in 2017.

(9.15.15) Budget Provision Could Delay Corporate Rate Cut
RALEIGH — A new round of tax cuts in the $21.735 billion state budget for 2015-16 may prevent the state from lowering the corporate income tax rate to 3 percent in 2017 because tax collections are projected to be $74.7 million lower than a revenue target set two years ago. Even so, legislative leaders say they are confident that the state will collect enough revenues to trigger a second cut in the corporate income tax that would take effect Jan. 1, 2017.

(9.10.15) Bush Tax Plan Emphasizes Simplicity, Growth
GARNER — Former Florida Gov. and Republican presidential candidate Jeb Bush on Wednesday outlined his economic plan, a proposal he said would lift the economy out of the post-recession “new normal” and “lift up everybody.” Bush told an audience in Garner, “We need to jump-start our economy, and we can do that by fixing our broken tax code.”

(5.27.15) Tax Cuts Will Boost State’s Business Rankings
RALEIGH — Amid the uncertainty of state budget negotiations, one fact still holds: North Carolina’s corporate tax rates will continue to drop, and those cuts will improve the state's standing in an index from the Tax Foundation in Washington, D.C., ranking state business climates. Once the rates triggered by strong revenue growth take effect, the Tar Heel State will rank 14th nationally, up from 44th in 2012.

(5.07.15) Unexpected Surplus Would Trigger Lower Tax Rates
RALEIGH — The tax reform law passed by the General Assembly in 2013 — lowering personal income tax rates, establishing a flat tax, and reducing corporate income tax rates — included a trigger provision that would cut lower corporate tax rates even more if tax collections exceed revenue projections. If tax collections continue to come in at or above the levels forecast today, the corporate income tax rate would drop from 5 percent to 4 percent on Jan. 1, 2016. If next year’s collections exceed projections, another trigger would kick in, dropping the rate by an additional percentage point on Jan. 1, 2017.

(4.13.15) Senate’s Tax Proposals Mostly Draw Kudos
RALEIGH — The bill would lower the franchise tax rate — imposed on all businesses in North Carolina — from $1.50 per $1,000 to $1.35 per $1,000. It would raise the minimum franchise tax from $35 to $200. For holding companies, the bill would double the maximum franchise tax from $75,000 to $150,000.

(9.17.14) Capital Gains Cut Would Build Economic Momentum
RALEIGH — North Carolina can continue the positive economic momentum of its recent tax reforms by reducing or repealing the state’s tax on capital gains. That’s a key conclusion in a new John Locke Foundation Spotlight report.

(5.30.14) McCrory Signs Tax Bill Covering E-Cigs, Local Business Taxes
RALEIGH — The Senate gave initial approval to House Bill 1050 Wednesday and made its final vote just after noon Thursday. The House concurred with the Senate version an hour later, and Gov. Pat McCrory signed the bill at 4:05 p.m. The bill also did away with local privilege license taxes assessed by cities and towns. More than 300 North Carolina municipalities assess some sort of privilege license tax, bringing in $62.2 million annually.

(4.16.14) McCrory Uses Tax Filing Deadline To Tout Historic Tax Reforms
RALEIGH — Gov. Pat McCrory said the package of tax simplification and rate cuts passed last year would provide more stability to business owners and leave more money in consumers’ pockets, encouraging job creation and economic growth. Analysis by the John Locke Foundation and N.C. General Assembly staff showed that most households would pay lower taxes because of the tax reforms.

(10.31.13) CJ Editorial: A Ticket To Ride
A recent legislative debate over the types of ticketed entertainment that deserve to be exempted from the state's sales tax inadvertently offered a free advertisement for the John Locke Foundation's proposed Unlimited Savings Allowance, or USA, Consumption Tax.

(7.17.13) N.C. Tax Reform Plan ‘Blew Other States Away,’ Analyst Says
RALEIGH — North Carolina’s tax reform package, cutting the personal income tax rate, is the most significant plan likely to be approved in 2013, an analyst with a national tax reform organization said Tuesday. An economist with another organization said the changes would make the state’s tax code much friendlier for businesses.

(7.16.13) McCrory, Legislative Leaders Announce Historic Tax Reform
RALEIGH — Gov. Pat McCrory, House Speaker Thom Tillis, and Senate leaders Phil Berger used the backdrop of the Old House chamber in the historic Capitol Monday to announce the agreement of the tax reform package that has consumed months in the negotiating process and could become law within days. The nonpartisan Tax Foundation said the changes would move North Carolina's business tax climate from 44th in the nation to 17th.

(7.11.13) Key House Tax Writer Says Tax Reform Remains Possible
RALEIGH — House Finance Committee Chairman David Lewis, R-Harnett, said Wednesday he "feels confident" both the House and Senate are united in the goal of reforming the tax code while raising enough money to keep state operations funded. He did warn, however, if no agreement is reached soon, legislative leaders will focus on passing a budget and adjourning.

(7.09.13) McCrory Says Tax Reform Is ‘Very Close’
RALEIGH — Gov. Pat McCrory sounded an optimistic note while discussing tax reform during a Monday press conference marking his first six months in office. McCrory, a Republican, discussed a number of issues during the session with reporters.

(7.03.13) Senate Vote Moves Tax Reform Closer To Reality
RALEIGH — Tax reform moved a step closer to the finish line Tuesday as the Republican-led state Senate gave its tentative approval to its modified plan by a 32-15 margin. While it’s not clear whether Republican Gov. Pat McCrory backs the proposal, the GOP leader in the House says his Senate counterparts are moving in the right direction.

(7.02.13) Senate Committee Moves Tax Plan Toward Passage
RALEIGH — The Senate Finance Committee's approval of a tax reform proposal lifted hopes that a compromise with the House could be pieced together before the General Assembly adjourns this summer. The new plan finds common ground with its House counterpart in several areas, including expansion of the sales tax and the treatment of tax deductions.

(6.21.13) Tax Reform Debate May Tie Up TABOR
RALEIGH — House Bill 274, which would limit annual budget hikes through a formula set in the state Constitution, already passed the House Committee on Government, but has stalled as the House and Senate try to reconcile differing tax packages. If H.B. 274 passes both chambers with 60-percent majorities, voters would consider it as a constitutional amendment as early as 2014.

(6.14.13) Senate Gives Tax Reform Initial Approval
RALEIGH — House Bill 998 passed the Senate Thursday by a 30-17 vote, with two Republicans joining 15 Democrats in opposition. One of the opponents was Sen. Bob Rucho, R-Mecklenburg, who sent a letter that morning to Senate leader Phil Berger resigning as co-chairman of the Senate Finance Committee. Berger refused to accept the resignation.

(6.13.13) Senate Tax Reform Plan Passes Key Committee Hurdle
RALEIGH — The measure was approved without the support of the author of another key tax reform proposal. Sen. Bob Rucho, R-Mecklenburg, who co-chairs the Senate Finance Committee, told his colleagues that he would not vote for the Senate’s version of House Bill 998. In Rucho’s place, Senate President Pro Tem Phil Berger, R-Rockingham, appeared before the committee to urge support for the bill.

(6.12.13) Senate Tax Compromise Cuts More Than Earlier Proposals
RALEIGH — Senate leader Phil Berger unveiled the latest tax reform plan Tuesday. The plan would reduce the personal income tax, eventually eliminate the corporate income tax, and put a hold on efforts to broaden the sales tax. Berger noted that the bill would not impose sales taxes on services that now are not taxed.

(6.08.13) State House Passes First Major Tax Reform in Decades
RALEIGH — The bill passed the House by a 72-32 vote, with one Democrat — Rep. William Brisson, D-Bladen — joining 71 Republicans in voting for the bill. Friday's vote signaled the initial approval of a measure that would fulfill a major campaign promise.

(6.07.13) House Tax Package May Reach First Floor Vote Today
RALEIGH – A tax reform package cleared a key committee Thursday and is headed for a House floor vote, possibly as early as today. The bill passed the House Appropriations Committee, the same committee that a day earlier failed to consider the proposal and put its fate in doubt.

(6.06.13) House Reaches Compromise On Tax Reform Plan
RALEIGH — GOP leaders had to regroup after the House Appropriations Committee failed Wednesday morning to approve a procedural vote that would have allowed the committee to proceed with the bill. Rep. Julia Howard, R-Davie, sought to eliminate a cap of $25,000 for certain itemized deductions. That move would have reduced state tax collections by $525 million a year.

(6.05.13) House Offers Broad Tax Cut
More than 80 percent of NC households would pay less state tax under the House plan than they currently do, including all households below $40,000 in income.

(6.04.13) Tackling Tax Reform
North Carolina’s outdated tax code is setting back efforts to boost the state’s economic growth.

(5.31.13) Competing Tax Plans Bring Out Differences Among Republicans
RALEIGH — All three proposals — by Senate Republicans, House Republicans, and a bipartisan group of senators — would eliminate the graduated income tax rate in favor of a flat income tax rate. Currently, the rate varies from 6 percent to 7.5 percent, depending on income. Gov. Pat McCrory, a Republican, said he did not favor expanding the sales tax as broadly as the Senate Republican plan envisioned.

(5.30.13) Tax Reform Is About More Than Modernizing Outdated System
North Carolina has fallen behind our neighbors in competing for new businesses and expanding existing ones, resulting in a sluggish economy.

(5.24.13) Taxes and Growth: More Evidence
Does state tax policy affect state economic growth? Fiscal conservatives tend to say yes. Fiscal liberals tend to say no.

(5.17.13) House Would Replace Graduated Income Tax With Flat Tax
RALEIGH — The House Republican tax modification plan would lower the sales tax rate slightly and broaden the sales tax to include repair, maintenance, cleaning, and installation services, and service contracts. Unlike a competing tax plan presented by Senate Republicans, it would not expand the sales tax base to cover all services.

(5.17.13) Assessing the House Tax Plan
Now that both legislative chambers have outlined their approaches to state tax reform, bargaining can begin.

(5.10.13) Assessing the Senate Tax Plan
Because the Senate plan seeks to replace income-tax revenue with a broadened sales tax, it picks unnecessary fights with dozens of industry groups.

(5.08.13) Senate Tax Plan Would Broaden Base, Cut Rates
RALEIGH — Senate leaders used a Tuesday press conference to announce their long-awaited tax proposal, a proposal that would lower personal and corporate income tax rates, along with the sales tax rate. It also would expand the sales tax base to cover services not currently taxed in the state.

(2.05.13) Tax Reform Key to N.C. Economic Growth
Lawmakers who want to boost the Tar Heel State’s economy must tackle a tax code with biases against work, savings, and investment.

(2.01.13) A Status Report on Tax Reform
Gov. Pat McCrory, House Speaker Thom Tillis, and Senate leader Phil Berger have all committed to the goal of adopting a pro-growth tax code.

(1.30.13) New Study Skews Data on N.C. Tax Burdens
RALEIGH -- There's no reason to believe a new report's claim that North Carolina's tax system takes a "much larger share" from middle- and low-income families than from families with higher incomes. The John Locke Foundation documents how the misuse of selected federal tax data leads left-leaning analysts to the wrong conclusions.

(1.25.13) FAQs on State Tax Reform
Tax reform is a complicated issue. It isn’t just an economic or fiscal issue. Politics will inevitably play a role.

(1.24.13) Competing Tax Plans Seek To Stimulate Investment and Growth
RALEIGH — Efforts are under way to make North Carolina the first state since Alaska in 1980 to eliminate taxes on total personal income. Competing proposals also would launch a pro-growth tax reform renaissance that would scrap corporate income taxes that discourage capital investment and savings.

(1.23.13) JLF Tax Reform Proposal Could Generate 80,500 Jobs in First Year
RALEIGH — Replacing North Carolina's existing income, corporate, sales, and estate taxes with a new consumed-income tax dubbed the USA Tax could generate 80,500 new jobs in the first year, while boosting the state's economy by $11.76 billion. Those numbers are based on an outside analysis of tax reform proposals included in the John Locke Foundation's new book, First in Freedom: Transforming Ideas Into Consequences for North Carolina. JLF is releasing the book as new North Carolina Gov. Pat McCrory and a Republican-led General Assembly turn their attention to potential tax reforms.