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Today @NCCapitol (May 31): T is for taxes, Tillis and ... tweed?

Posted May 31, 2013

— Good morning and welcome to Today @NCCapitol for Friday, May 31. This is WRAL's roundup of what you need to know about North Carolina state government today.

TAX REFORM: The state House and Senate unveiled details of three competing tax plans Thursday

All three would lower corporate, personal and sales tax rates while expanding the number of items and service to which sales taxes apply. And the backers of all three plans say they would eventually like to see the state have no income tax. But the three plans take different approaches to the problem. 

In the House, a bill put forward by Rep. David Lewis, R-Harnett, takes the most cautious approach. While it makes the deepest cut to corporate tax rates, it does not change the calculations upon which a company's taxable income is calculated. Both Senate plans change the sales apportionment formula, making the corporate income tax code friendlier to manufacturers and other corporations with large real estate and equipment holdings. 

NC Sales Tax Lawmakers divided on how to overhaul NC tax system Senators have developed two competing tax plans. A plan developed by Sens. Bob Rucho, R-Mecklenburg, and Bill Rabon, R-Brunswick, has the backing of top Senate leaders. Of the three plans, the Rucho-Rabon plan is the most aggressive in the long run, creating the biggest long-term income tax cuts in exchange for the most aggressive expansion of sales taxes on everything from groceries to legal services. 

The other Senate plan, a bipartisan proposal developed by Sens. Dan Clodfelter, D-Mecklenburg, and Fletcher Hartsell, R-Cabarrus, stakes out a middle ground between the House and Rucho proposals. Although the tax rates on the Hartsell bill are closer to the House bill, it shares features, such as changing how corporate taxes are calculated, with the other Senate plan. 

Gov. Pat McCrory says he prefers the House and Clodfelter plans, that do not tax food or prescriptions or extend sales tax to currently untaxed businesses. “I believe the bipartisan plan set forth by Senators Fletcher Hartsell and Dan Clodfelter as well as Representative David Lewis’ bill are closest to my position. After more than five months of serious dialogue with community, business and legislative leaders, we are on the cusp of tax reform," McCrory said.

The Wrap @NCCapitol (May 30) The Wrap @NCCapitol (May 30) Critics of the tax plans say they shift the tax burden from relatively high income earners to low income individuals. "Claims that income tax cuts will create jobs and boost the economy don’t hold up against other states’ experience. Instead, North Carolina will lose the resources needed to pay for things that businesses and families rely on, like our neighborhood schools and world-class universities," said Alexandra Forter Sirota, director of the Budget &Tax Center.

WRAP: Capitol Bureau Chief Laura Leslie and reporter Mark Binker hash over the tax plans and review other action from Thursday the Wrap @NCCapitol

TILLIS: House Speaker Thom Tillis will formally step into the 2014 Republican primary for U.S. Senate next week, confirming months of speculation that he was interested in contending for the chance to unseat incumbent Democrat Kay Hagan. Word that Tillis was about to go public with his campaign plans began circulating among his colleagues at the state legislature late Thursday. A source knowledgeable about his campaign confirmed Tillis would file the paperwork needed to announce and organize a bid early next week. Other Republican insiders confirmed that an announcement was imminent. Tillis did not return a phone call seeking comment.

Tillis confirmed to the Associated Press that he was running. "I see a government that's broken. They're not making any progress and the president is taking us in the wrong direction," Tillis told the AP. Tillis said wresting the seat from Hagan is needed to help create a Republican majority in the chamber and help "turn the country in the right direction."

TILLIS RESPONSE: N.C. Democratic Party Spokesman welcomed Tillis to the campaign this way: “Speaker Thom Tillis has made a mess in Raleigh--imagine what he’d do in Washington. Tillis has ignored North Carolina job creation and the middle class. He and his special interest backers have forced deep cuts to education, rejected healthcare for 500,000 North Carolinians, endorsed an extreme budget that would essentially end Medicare and pushed to raise taxes on hardworking North Narolina families to give big tax breaks to the wealthy."

NOT A FASHION BLOGGER: In what has to be the oddest story yet of this session, Rep. Bryan Holloway, R-Stokes, says he is not the author of a preppy menswear blog titled "WASP 101." In a story posted Thursday on the fashion blog "Ivy Style," writer Christian Chensvold claims he was contacted by an anonymous source who suggested that "Richard," the main blogger at long-running menswear blog WASP 101, is actually Holloway. Chensvold points out a number of similarities and coincidences between the writer and the politician. Both have a dachshund named Governor. Both work in North Carolina politics. Their ages are the same, as are their birthdays, and Richard is Holloway's middle name. Chensvold also points out that photos of the second writer on the blog, "Kipp," bear a strong resemblance to Holloway's legislative assistant.

OTHER STORIES: Other stories we were following Thursday included: 

RED ROUTE: The impasse over the next leg of the N.C. Highway 540 loop could be over next week. The state Senate voted 44-5 Thursday to approve changes that would break a federal logjam created by a 2011 law. House Bill 10 would allow state transportation officials to study the so-called "red route," a potential corridor for the loop that cuts straight through the heart of Garner. However, the bill also gives legislators the final say on where the road will go – and House and Senate leaders pledge the red route won't be an option.

LOANS: A North Carolina House Committee unanimously endorsed a bill Thursday raising borrowing limits and interest rates on installment loans, putting the measure a step away from the governor's desk. The House Banking Committee signed off on the bill after its chief sponsor backed an amendment softening the interest rate increases. That was enough to win the neutrality of two watchdog groups, but the state attorney general and others still maintained the bill would encourage endless debt for poor people.

CURSIVE: North Carolina legislators say they want public schools to get "back to basics" by ensuring they teach cursive writing and rote multiplication in elementary school. The Senate gave final approval Thursday to a House bill requiring school boards ensure their students can create readable cursive documents by the end of fifth grade and can show they've memorized multiplication tables. The bill entitled "Back to Basics" now goes to Gov. Pat McCrory's desk for his signature.

 NOTED: From other outlets:

Stateline:In 2010, states with high tobacco taxes lost about $5 billion in revenue because of cigarette smuggling, according to the Bureau of Alcohol Tobacco Firearms and Explosives. Experts say the number is climbing. Most of the black market in cigarettes is between low-tax states and high-tax states: Smugglers purchase cigarettes in a low-tax state and transport them to a high-tax state. Then they sell them at a discount to smokers while still pocketing a healthy profit. Because there is such a wide disparity among states’ cigarette taxes, the price differential is well worth the risk of smuggling, according to law enforcement officials.

Charlotte Observer: An unusually public dispute between two Republican state legislators that erupted last week has its roots in, of all things, a national debate over city-owned broadband systems. The feud provides a window into how campaign contributions are used for influence in Raleigh, how outside organizations help craft legislation, and how General Assembly leaders can exert their power when challenged.

Washington Examiner: Mel Watt, President Obama's nominee to oversee government-sponsored mortgage giants Fannie Mae and Freddie Mac, is a liberal Democrat fond of big government. He is also longtime politician, intimate with K Street and Wall Street. With his faith in government and coziness with big business, Watt personifies Obamanomics. Hat Tip: Travis Fain.

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  • bwh0069 May 31, 2:33 p.m.

    Because their earnings were taxed when they made the contribution to their pension fund.State employees not vested as of 6/89 have to pay as everyone else does.

  • remer54 May 31, 1:51 p.m.

    Taxes dont know so I will ask. Do retired federal and state employees pay income taxes on their retirement money in the state of NC. If not why do I have too.