A “comprehensive tax reform” bill passed a final vote in the state House and Senate Wednesday and now moves to the desk of Gov. Pat McCrory, where it is expected to be signed.
The North Carolina House voted 77-36 in favor of the Tax Reduction Act (H.B. 998). The Senate also gave final approval of the bill Wednesday afternoon.
The House gave the bill its initial OK Tuesday, voting 77-38 for the tax plan after debate was cut off by Republicans after less than 30 minutes. The Senate voted 32-17 in the bill’s second reading.
The bill would reduce corporate and individual income tax rates and expand the sales tax base slightly. It would also cap mortgage interest and real estate taxes at a $20,000.
GOP leaders presented the bill Monday, saying the tax reforms will encourage productivity and is fiscally responsible. Democrats, however, argue that state lawmakers would have $2.4 billion less available for government spending over the next five years.
“More than anything, this tax reform encourages economic growth and job creation,” McCrory said, calling the bill the most “comprehensive tax reform package” in the state’s history. “It sends a positive signal … that North Carolina is open for business”
McCrory says the tax reform will take the state from 44th in the nation to 17th in the nation as far as tax competitiveness.
According to an analysis by the legislature’s non-partisan staff, a family of four earning $40,000 per year, filing jointly, would save $100 per year. That same family of four, earning $150,000, would save $750 per year. And a family of four, earning $250,000, saves $2,400.
One of the biggest changes is cutting the corporate tax rate from nearly 7 percent now to as little as 3 percent by 2017 if tax revenue grows.
Democrats say the bill helps the wealthiest and large out-of-state corporations at the expense of working families.
The bill also applies an increase in sales tax to electricity, movies and service contracts.
The governor’s office scheduled a signing ceremony at the old Capitol building late Wednesday afternoon, but didn’t say for what legislation.