Today was a historic day for the Tar Heel State. After months of debate, Governor Pat McCrory, Senate President Pro Tempore Phil Berger, and House Speaker Thom Tillis announced their compromise tax reform package. Under their plan, the current 3-tiered personal income tax system (rates of 7.75, 7, and 6 percent) would be replaced by a flat rate of 5.8 percent in 2014 and 5.75 percent in 2015. The corporate income tax would fall from 6.9 to 6 percent in 2014 and then to 5 percent in 2015. If revenue goals are met, that rate would drop to 4 percent in 2016 and then to 3 percent in 2017. Additionally, the death tax would be eliminated and the gas tax would be capped at 37.5 cents.
While not quite as impressive as previous plans introduced in the North Carolina Senate, the Tax Simplification and Reduction Act would undoubtedly be the nation’s largest state-level taxpayer victory of 2013 – a $500 million cut over two years and a $2 billion cut over five years if revenue goals are met.
As I’ve stated in recent letters to state leaders, North Carolinians need pro-growth tax reform now more than ever. The state’s top individual income tax rate is higher than that of any state in the South, and a move to a flat rate of 5.75 percent would provide taxpayers much-needed relief while improving the state’s economy and creating jobs. The corporate income tax cuts would also send a clear message that North Carolina is open for business. In fact, the State would jump from 44th to 17th in the Tax Foundation’s Business Tax Climate Index.
By implementing the boldest state tax reform plan of 2013, North Carolinians would be given some much-deserved financial relief, which is especially important in light of rising federal tax rates and soaring health care costs.
Stay tuned to NTU.org for the latest on tax reform in North Carolina.