Senate rolls out compromise tax plan

Posted June 11, 2013

— After unveiling competing Senate tax reform proposals two weeks ago, Republican leaders rolled out a compromise plan Monday that promises to roll back income and business taxes while reining in a massive expansion of sales taxes proposed earlier.

Senate leadership said the latest plan, which alters legislation approved late Monday by the House would cut taxes by more than $1 billion in the first three years.

"(The plan) cuts taxes on people across the board, cuts taxes on job creators across the board," said Senate President Pro Tem Phil Berger. "Our current tax plan takes too much money out of the pockets of the private sector. It takes too much money out of the pockets of individuals."

Following are some highlights of the proposal:

  • Reduce the state personal income tax rate from the current maximum of 7.75 percent to 5.4 percent in 2014 and 5.25 percent in 2015
  • Phase out the sales tax on food by 2016
  • Phase out the corporate income tax by 2017
  • Phase out the business franchise tax by 2018
  • Eliminate local business privilege taxes in 2018
  • Repeal the estate tax

Senate leaders also decided against expanding the state sales tax to services that are not currently taxed, such as automotive repairs, haircuts and professional services, although they do plan to tax movie tickets and other entertainment spending.

Phil Berger Berger: Senate plan cuts taxes across the board

A plan authored by Sen. Bob Rucho, R-Mecklenburg, would have lowered the sales tax rate from 6.75 to 6.5 percent but would have spread the tax to up to 130 services. Meanwhile, a proposal backed by Sens. Dan Clodfelter, D-Mecklenburg, and Fletcher Hartsell, R-Cabarrus, would have limited sales tax expansion to services linked to tangible services, such as auto repairs and appliance delivery.

The House proposal would, like the Clodfelter-Hartsell proposal, limit sales taxes to services linked to physical products. It also would lower the overall rate to 6.65 percent.

"From the start of this process, we said that elected officials should not pick winners and losers through our tax code. Taxing mechanics and repairmen in order to give tax cuts to lawyers and lobbyists is not a fair policy,” Berger said in a statement.

Under the new Senate proposal, the sales tax would remain at 6.75 percent.

Officials said the plan also would eliminate the annual tax-free weekend for school supplies and close a number of tax loopholes to generate the revenue needed to offset the income and business tax cuts.

Berger, R-Rockingham, said the Senate tax plan would make North Carolina one of the most business-friendly states in America, compared with its current No. 44 ranking by the Tax Foundation for business tax climate.

“High taxes are a big reason we’ve fallen behind,” he said. “Voters elected us to change the direction of our state. This plan will make North Carolina competitive for 21st-century jobs while providing families with the largest tax cut in state history.”

Democrats say the new proposal would cut revenue for municipalities.

"When you help one entity, you are hurting something else. The question is how do you balance that out," said Sen. Floyd McKissick, D-Durham. "It will have a profound impact on (cities and counties') ability to meet their needs. They will have to raise local property taxes to make up for it."


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  • Plenty Coups Jun 12, 2013

    sandbar-"The state of Maryland did a study a few years ago (They were ranked #1 in education that year) and the data showed that spending does NOT correlate to better educational results."

    And you have a link? I have seen Maryland ranked number one by Education Week magazine, but I don't recall them beating Massachusetts in NAEP scores but they're usually up there, along with most northern states. Southern states consistently lag, the ones that spend the least. I haven't seen any study that doesn't show a state by state comparison of spending that contradicts my statement. Usually, its right wing sites such as the Heritage Foundation which try to show how overall U.S. spending has gone up and results aren't that much better. Or they don't use NAEP data which is the most accurate way of measuring. What they also ignore is that most of that spending is for special ed services and free/reduced lunches etc..

  • Plenty Coups Jun 12, 2013

    Plenty-"Actually, there is. A pretty strong one.

    Sandbar-"That study doesn't take into count low income numbers or hispanics.....some states count all test scores and some don't"

    You don't know what you're talking about and you're just making things up. The rankings used by that particular study come from the NAEP. All states take it and it is representative of an entire state's population. You're confusing it with I suppose the SAT, in which some students take it and some don't.

  • Sandbar33 Jun 12, 2013

    "Actually, there is. A pretty strong one.


    That study doesn't take into count low income numbers or hispanics.....some states count all test scores and some don't

  • Sandbar33 Jun 12, 2013

    "Did you bother to read the article? The part that showed a correlation with spending and results?"

    The state of Maryland did a study a few years ago (They were ranked #1 in education that year) and the data showed that spending does NOT correlate to better educational results.

  • Plenty Coups Jun 12, 2013

    "Yeah a lovely myth. There is no correlation"

    Actually, there is. A pretty strong one.


  • Plenty Coups Jun 12, 2013

    whatelse-"Yeah a lovely myth. There is no correlation, and besides education has gotten very little cuts."

    48th in education spending and 5 years of cuts speak for themselves. I know you don't value public education but every successful country in the world does.

    " It really does not matter on these rankings, the Government run public system, is dysfunctional and corrupt."

    Of course it is...because you say so, right?

  • goldenosprey Jun 12, 2013

    Whatelse, cry me a river. If you don't like how your fellow Orange Countians vote you can always move out to flyover country where taxes are lower and schools are poorer, (as they might say, skools are worser). Or you can protest and get yourself arrested. My prop taxes were way higher in Florida, that wonderful land of no income taxes where you are nickel and dimed for every little thing that comes at no cost here.

    I know conservatives want to hasten us to third world status, but closing public schools?!?! Even the poorest countries have that.

  • whatelseisnew Jun 12, 2013

    "Taxes are already at a historical low for everyone, and businesses still aren't hiring. With the typical conservative mindset, of course, their answer is "cut taxes some more!" because they don't have any other answer to fall back on." - Bendal1"

    Where do you live? My taxes are higher and along the way the Dems added new taxes and increased many existing ones. The last tax cut I ever saw was when the Reps had control of the County Commission and they lowered the mil rate for property. As soon as the Dems took the commission back over, they slammed on a big increase and at the time they thought that was very funny. Since then my taxes have done nothing but GO UP.

    Any of you that think you are paying too little, simple cut a check to the State Revenue office or the County Revenue office where you live.

  • whatelseisnew Jun 12, 2013

    "Yeah, higher pay means nothing in our society. No one ever asks for raises in the private sector and all top notch workers are content to never get raises. Your comment is ridiculous."

    Government employees simply have to exist to obtain a raise. The same can be said for unions private or public. True private sector employees have to meet performance standards to get raises. If we assign raises based on the Public School performance, we should be CUTTING their salaries and benefits.

  • whatelseisnew Jun 12, 2013

    "Because everybody lives in Chapel Hill, right? While comparatively high in Chapel Hill, they're still lower than most other states. The conservative Tax Foundation rates NC property taxes as being far below the national average. WE are 13th lowest nationally. Overall taxes in NC are also below the national average. Don't just take my word for it:"

    SO WHAT? If you want to give the Government more money, then do it. Perhaps you can donate the taxpayer money your spouse is receiving. My taxes exploded while at the same time the school system just continued to get worse. Nope time to end that money hog.