By Jim Ahler
Already this year, seven different tax reform bills have been introduced in the General Assembly, and countless organizations on both sides of the aisle have staked out a position on the highly complex issue. So it’s understandable that many North Carolinians feel overwhelmed by the partisanship, unsure about where to turn for the facts.
That’s why the North Carolina Association of CPAs decided to take action by launching the “Tar Heel Tax Reform” initiative – a platform to help the citizens of our state cut through the clutter, understand the need for tax reform, and monitor the debate. As “financial translators,” we believe it’s our responsibility to provide an objective, nonpartisan perspective to families and business owners.
Urgent Need for Reform
Our initiative’s primary goal is to ask citizens to urge their legislators to work together to enact meaningful tax reform, because we simply cannot afford to wait.
Our tax code has not fundamentally changed since the 1930s when 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 or 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 to 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.
Guiding Principles for Tax Reform
The nonpartisan North Carolina 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 is apparent and tax reform is the solution to protect our citizens and our state’s economic future.
Jim Ahler is Chief Executive Officer of the North Carolina Association of CPAs (NCACPA)