By Lee Weisbecker, Staff Writer, Triangle Business Journal
North Carolina House Republicans put out their own version of tax reform Thursday with a plan they say would slash collections by $1.2 billion over the next five years.
One key provision would reduce the state’s combined 6.75 percent sales tax rate to 6.65 percent.
Personal income tax rates, which now range from 6 percent at the low end to 7.75 percent for high-income filers, would drop to a flat 5.9 percent on 2014 taxable income.
The House plan also calls for expanding the state’s sales-tax base by taxing more services. It would expand to far fewer services than the plan offered up by Senate Republicans last week.
House members made copies of the plan’s outline available to reporters and other interested parties, rather than calling a press conference as their Senate colleagues did.
“We do think that it is a good plan that helps the working families of our state …” Rep. David Lewis (R-Harnett) told reporters before going into legislative session.
The Budget & Tax Center, a project of the left-leaning N.C. Justice Center, issued criticisms of the plan even before it was circulated.
“The centerpiece of the plan is an unaffordable income tax cut that will primarily benefit the rich and profitable corporations,” the center says. “The $1.2 billion price tag over five years is more than what we spend on our community colleges annually.”
The Senate version of tax reform wants to slash revenue collections by $1 billion over three years. Under that plan, personal incomes tax rates would drop to 4.5 percent over three years. Sales taxes would decline to 6.5 percent, but a large list of currently untaxed services would come under the levy.
House and Senate members will now work to mesh their two plans into one, anticipating a June 30 deadline for putting a new budget in place.
After reviewing the House plan, Gov. Pat McCroy called it encouraging.
“The House plan combined with other proposals provides several options that will allow us to develop competitive tax reform which is fair to North Carolina families, attracts job creators and provides certainty that will encourage home-grown businesses to expand,” McCrory said in a statement.
McCory says he’ll work with leaders in both the Senate and House to iron out a tax reform plan that is “financially sound.”
Lee Weisbecker covers Finance, State Government.