Unless you’ve been hiding under a rock lately, you’ve heard a lot of talk about tax reform in our state. With seven bills already introduced in the General Assembly this session and numerous organizations calling for reform, it’s shaping up to be the year to get tax reform on our books.
And it couldn’t come soon enough. Our tax code has not fundamentally changed since the 1930s, when Franklin D. Roosevelt was president and our economy was driven by manufacturing and agriculture. Since that time, North Carolina’s economy has evolved, but our tax code has not.
As a result, our state’s revenue stream has become increasingly unpredictable, especially during economic downturns. In recent years, North Carolina lawmakers have been forced to choose between making deep cuts to basic services like education, public safety and transportation, or imposing “temporary” tax increases to make up for budgetary shortfalls.
North Carolina has the highest personal income and corporate tax rates in the Southeast and the 17th-highest total tax burden in the nation, creating a difficult climate for economic growth and job creation. Even more alarming, current forecasts show that if we fail to modernize our tax code, North Carolina’s state government will not be able to meet basic obligations in the next three-five years.
This roller coaster revenue stream that our state is dealing with impacts North Carolinians in real ways. Whether it’s a temporary sales tax increase one year or a reduction in teachers the next, these impacts are hitting North Carolinians hard.
The good news is that it can be fixed — and reforming our tax code is the answer.
That’s why the N.C. Association of CPAs decided to take action by launching the Tar Heel Tax Reform Initiative — a platform to help the citizens of our state understand the need for tax reform and to monitor the debate. As the state’s CPAs, it’s our job to help North Carolinians understand why tax reform is critical to our state’s well-being and why it will benefit all of us in the long run.
The nonpartisan N.C. Association of CPAs is not promoting specific legislation, but we are urging lawmakers to ensure that three key principles guide their tax reform efforts. First, we must make sure that any reform effort creates a more reliable revenue stream. Second, real reform should create a transparent tax code that taxpayers can understand. And third, tax code reform must be fair.
We are encouraging lawmakers to continue their important work on tax reform this session. While organizations speaking out on tax reform may have different approaches on how to reform, one thing is clear: Everyone from across the political spectrum agrees tax reform is needed.
North Carolina cannot afford to wait until the next economic downturn to get our financial house in order. The time is now, the momentum and support of the issue are apparent, and tax reform is the solution to protect our citizens and our state’s economic future.