Senate leader Phil Berger Monday released a video touting what he calls “the largest tax cut in North Carolina history.”

Berger, a Rockingham County Republican, plans Tuesday to announce the contents of the leadership’s tax reform bill, dubbed the “Tax Fairness Act.”

“It makes your tax code simpler, fairer, and everyone will pay their fair share,” Berger says in the video. Berger says the plan will cut more than $1 billion in taxes, but it doesn’t say how many years it will take for the cuts to materialize.

Vital state services, such as education and infrastructure, would be preserved, Berger says.

The personal income tax would be reduced from 7.75 percent (at the highest bracket) to 4.5 percent over three years. Sales tax and corporate income tax rates would also be cut.

“This plan expands the sales tax so everyone is treated fairly,” Berger says. “No one gets special breaks or loopholes. … Mechanics and lawyers are treated the same; hairstylists and accountants, both taxed fairly.”

Holding the line on spending would pay for the tax cuts, Berger said.

Earlier Monday, Sabra Faires, a former assistant revenue secretary and currently an attorney with the Raleigh law firm of Baily & Dixon, discussed tax reform during a luncheon sponsored by the UNC Chapel Hill School of Journalism and Mass Communication’s Program on Public Life.

Faires, who said she had volunteered to offer technical advice to a bipartisan tax-reform package, said tax reform is needed because the current tax structure does not provide sufficient and stable revenue, is not aligned with the state’s economy, does not treat similar taxpayers the same, and is viewed as being uncompetitive with other states.

“Time has changed the composition of North Carolina’s taxes,” Faires said.

Faires agrees with Berger that sales taxes are more stable source of revenue than income taxes.

In 1970, personal income taxes and sales taxes brought in about the same percentage, Faires said. During the 1970-71 fiscal year, personal income taxes brought in 32.7 percent of the state’s revenues while sales taxes brought in 31 percent, according to a chart provided by Faires.

In the ensuing decades, the share of revenues brought in by the personal income tax has increased, with 55.6 percent being projected for the current fiscal year.

Faires noted that personal income tax collections tend to be more sensitive to swings in economic activity than sales taxes. “The non-withholding portion of it is very volatile,” she said. “Sales tax is more stable.”

The state never has recovered from what happened in the 1990s, when taxes were cut and services were expanded, Faires said.

“In good years, the individual income tax overproduces, and in bad years it underproduces,” Faires said.

Faires noted that in years with surpluses, it’s easy for lawmakers to spend money on other things, only to have to find places to cut in subsequent years when the money is not there.

She said the bill she had reviewed is revenue-neutral, meaning it is designed to bring in approximately the same amount of tax revenue as the current tax system. That bill is sponsored by Sens. Dan Clodfelter, D-Mecklenburg, Fletcher Hartsell, R-Cabarrus, Clark Jenkins, D-Edgecombe, and Wesley Meredith, R-Cumberland.

“Broad base, low rate is really the mantra of tax reform,” Faires said.

The Senate leadership tax plan that is about to be unveiled touts being “the largest tax cut in North Carolina history.”

Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.