The Tax Simplification and Reduction Act
Tax reform is a process, not an event. The Tax Simplification and Reduction Act (House Bill 998) is another step towards reforming North Carolina’s outdated tax system. On a nearly party-line vote, the House passed on Third Reading its tax reform bill by a vote of 75-37.
My view is that this bill is a major step in the ongoing process of much-needed and long-overdue tax reform. It begins the process of repealing tax loopholes and preferential tax treatment which favor specific industries within the State. Under the plan, the working families of North Carolina will see more dollars in their pocket, and our state will become more competitive for job creation. Americans for Tax Reform predicts that this plan would result in the state going from 7th worst, to the 19th best business tax climate in the nation. Under this plan, two-thirds of North Carolina tax filers will see an average personal income tax reduction of 20%. Here is what I view as the best parts of the bill:
Cuts Personal Income Tax by $1.7 billion over the next 5 years
- All North Carolinians get a Personal Income Tax Break
- Eliminates the current, three-tiered tax bracket system and places all North Carolinians on a flat, fair, 5.9% tax rate
- Lower tax rate than all neighboring states, except Virginia (by 0.15%)
- Helps Low and Middle-Income Earners by doubling the size of the Standard Deduction
- The most vulnerable North Carolinians will retain an effective 0% Personal Income Tax rate
- North Carolina will have one of the most generous standard deductions in the country
- More than doubles the Child Credit for Low and Middle-Income North Carolinians
- Increases child credit from $100 to $250 per dependent for families making less than $100,000
Protects Senior Citizens and Families by keeping existing exemptions
- Does not tax Social Security
- Keeps deductions for mortgage interest and property tax ($25,000 combined maximum). Deductions for charitable contributions remain unlimited
Cuts Business Taxes by more than $900 million over the next 5 years
- Cuts the Franchise Tax by more than 10%, and reduces Corporate Income Tax from 6.9% to 5.4%
- 5.4% rate would be the lowest in the southeast, except for South Carolina
Protects essential goods and services
- Keeps exemptions from state Sales Tax for food and medicine to ensure they are affordable for all citizens.
- The plan only expands the tax to services that ALREADY collects and remits part of the Sales Tax, like warranties and service contracts
More on the House’s Tax Reform plan in Issue #3 of the Raleigh Digest.
While this entire week was consumed on the budget, I took a break from budget discussions to go over to the Capitol for the signing of three of my bills: HB315 (Plastics Labeling Requirements), HB774 (Building Code Exclusion/Primitive Structures) HB829 (Sale of Growlers by Certain ABC Permittees). Governor McCrory was gracious and noted that he will be in Hendersonville soon for the swearing in of former District Attorney Jeff Hunt to a Special Superior Court judgeship.
I can only smile when I think of each of these bills, because I would have never guessed last year that I’d have proposed any of them. The Plastics bill came to me from the former director of Henderson County’s solid waste program, Will Sagar (he is now the executive director of the Southeast Recycling Development Council, a recycled plastics trade association). When he was looking for a sponsor for legislation to protect the recycling waste stream from contamination by degradable plastics, I was an obvious potential sponsor given my work on a wide range of environmental issues.
Having developed an unexpected specialty in alcoholic beverage law after working on the legislation for the Southern Appalachian Brewery and Sierra Nevada, I also was a natural for those wanting to pass legislation allowing the sale of Growlers at more retail establishments.
Finally, I got enticed to work on the primitive camps bill by some family history. My father, my uncle, my brother and I went to a summer camp outside of Weaverville run by C. Walton Johnson. I worked at that camp, Camp Sequoyah, and one of my campers was the grandson of “Chief” Johnson, Eustace Conway. Well, Eustace ended up running his own camp, Turtle Island Preserve (Turtle Island Preserve – Official Site). Going to Turtle Island is like stepping back into the 19th Century — no electricity, buildings and structures built in the way they would have been built two hundred years ago, and instruction that teaches kids skills (blacksmithing, non-mechanized farming, building log cabins, among others) that aren’t often taught.
Conway was the subject of a book, The Last American Man, and he more recently appeared in a segment of the History Channel’s Mountain Men, and it seems that appearance prompted local county building and health inspectors to descend upon Turtle Island to shut it down (Charlotte Observer: Watauga County ‘mountain man’ fighting to keep his nature camp open). It made no sense to me. If people wanted to give their kids a taste of what it was like to live a hundred or two hundred years ago, why shouldn’t our building codes (and health codes for that matter) allow that to happen? Hopefully, the bill that Governor McCrory signed will get Turtle Island Preserve back open.