@NCCapitol

GOP wins escalate NC tax reform debate

Posted November 9, 2012
Updated November 10, 2012

— Gov.-elect Pat McCrory and Republican legislative leaders campaigned on reforming North Carolina's tax system, and their election victories Tuesday mean proposals will be on the table when lawmakers return in January.

"What we want is a fairer system to collect the same or less in taxes," House Majority Leader Paul Stam said.

Republican leaders have focused on plans to reduce North Carolina's corporate and personal income tax rates to rival those in nearby states.

Last year, 44 percent of the more than $22 billion in tax revenue in North Carolina came from individual income taxes. Nationally, states average 34 percent of their total revenue from income taxes.

Corporate taxes generate only about 4 percent of the state's annual revenue, but critics complain the rate is the highest in the Southeast.

To offset those lower rates, however, tax loopholes could be eliminated and sales taxes added to services ranging from automotive repairs to landscaping to haircuts.

"Yes, you're tax went up over here, but it went down over there," said Stam, R-Wake.

Sales taxes account for about 27 percent of North Carolina's revenue, and excise taxes on gasoline, alcohol and cigarettes generate another 17 percent. Money generic, dollars NC taxes could be going up, down in near future

Raising and lowering taxes doesn't compute for Sharon Creech, the owner of N Style Hair Design in Raleigh.

"I don't think we need to create new taxes. I think we need to learn how to spend the money that we already have," Creech said.

GOP leaders haven't yet announced which loopholes and service taxes will be on the table.

"I'm confident we'll do some tax reform. I'm just not sure how extensive it will be," Stam said.

Chris Fitzsimon, executive director of the left-leaning NC Policy Watch group, said previous efforts to reform the state's tax structure have always failed.

"Some of the best minds in North Carolina have been working on this for 20 years and have yet to overcome some of the political and entrenched special interest opposition and that's still going to be there," Fitzsimon said.

Mike Walden, an economist with North Carolina State University, said the state's 80-year-old tax system is in need of an overhaul.

"Once you get into where the changes will be is where you get the disagreement," Walden said. "This is extremely heavy political lifting."

28 Comments

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  • immaannoid Nov 12, 10:51 a.m.

    They also need to get rid of "State Workers".

  • Mon Account Nov 12, 10:37 a.m.

    ""Can we please lose the stupid property tax on cars? It is unfairly applied anyway." -- smalldogsrule

    How is it "unfairly applied"? Explain please. Seriously." - davidk_at_unc

    This may be a reference to a Rhode Island issue. Used car: when bought from a dealer, the tax rate is based on sale price. When bought through a private sale, the state doesn't use the sale price- it gets it from a national auto dealership pricing book, not Blue Book. There are discrepancies between the two. So when it comes to private sales, some purchasers are paying a tax rate that reflects a value higher than they actually paid.

  • Rebelyell55 Nov 12, 10:11 a.m.

    There will be some type of tax reform, but majority of people won't like it. There will be an increase in taxes. I believe they'll reduce Corp. taxes. It's what Republicans do. There will be an increase in "fees" for services. This is just like a tax, but it hidden so the citizens don't realize they're paying more and the policticans don't have to admitt to raising taxes.

  • davidk_at_unc Nov 12, 10:10 a.m.

    "Get rid of the deduction for dependents. In its place tax each dependent. People should pay more taxes when they have children. The more children you have the less tax you pay and the more welfare you receive!. This is a serious flaw with the current tax structure." -- superman

    Would you please learn a different song? This one's getting REALLY OLD!!!

  • davidk_at_unc Nov 12, 10:08 a.m.

    "Can we please lose the stupid property tax on cars? It is unfairly applied anyway." -- smalldogsrule

    How is it "unfairly applied"? Explain please. Seriously.

  • miseem Nov 12, 9:05 a.m.

    I like the proposal. You can cut your own hair or yard and save yourself the proposed sales taxes, so you can control that a bit. Then if personal and corp tax rates are lowered, it's easy to attract business here because we have so much else going for us here, plus, everybody gets a share of the reduction.storchheim.

    And we can repair our own transmissions, plumbing and electrical problems. Maybe build our own roads and buy our own crude oil and refine it. The main problem is that all of these "spread the tax to services" plans want to tax the hairdresser, mechanic and tradesman, not the attorney, CPA or financial adviser. I guess that's because there are not too many hairdressers, mechanics and tradesmen in the General Assembly, but a lot of attorneys, accountants, insurance agents, etc. And guess who stands to save the most taxes out of these so called "improvements"? It ain't going to be the guy making $35,000 per year.

  • junkmail5 Nov 9, 7:57 p.m.

    You can also leave the Triangle, go to Mebane on I-85 and see a 10-15 cent a gallon difference. That has never made any sense either.
    paultaylorsr10

    Different counties have different taxes.

    Also need to reduce gas tax so our gas prices are always lower than all the surrounding states - they laugh at us, fill up before they come to NC and when they get across the border. If our gas was significantly less expensive they would wait to get here to fill up and we would have a lot more taxes. Also, can we now get rid of the tolls in NC???
    Tax Man

    How do you propose we pay for roads then? NC has more miles of road than surrounding states, over 50,000 miles more than VA or SC...which is why the gas tax is higher, since that's where that $ goes.

  • balog Nov 9, 7:55 p.m.

    "And then can ya’ll work on that financial hemorrhaging that was caused and perpetuated by 142 years of Democrat rule?"

    Yes because how dare the dems create places like RTP and grow the unc system from agricultural colleges to powerhouse research insitutions. Let's just defun them all so that way the few counties in this state that carry the rest of the state can be as backwards and ignorant as Surry, Franklin, and Caswell counties - I do not see big biotech and technology firms setting up shop down in Johnston. You can thank those horrible dems for making this state so attractive to businesses. Otherwise with ignorant republican rule, we would still be runningmills down by te eno river and picking cotton out in alamance country.

  • autismawareness Nov 9, 7:40 p.m.

    stop spending stop taking care of people

  • Crumps Br0ther Nov 9, 7:30 p.m.

    Verify a tax payers 20 (twenty) dependents. That might help.
    okayiquit

    budget cut eliminated that job. We've all made sacrfices in this economy citizen. We cant bust every deadbeat, just the dumb ones, but they we have to take care of them while they are in jail and all the free stuff they get while they are in there. If you really look at it, we're all in a revolving door of some sort.

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