Treasurer Cowell urges changes in tax code to steady state revenues and ease deficits
Speaking to the Greater Raleigh Chamber of Commerce on Wednesday, North Carolina Treasurer Janet Cowell urged tax reform, saying to the group, “The deficit we’re facing this year is directly related to our failure to modernize our tax system.”
Cowell envisions a revamp of the tax code that would entail broadening the tax base and possibly taxing services. In turn, the goal would be to reduce the sales and personal income tax rates by one percent. Reducing the number of exemptions for individuals and corporations is also part of the plan.
A more reliable tax structure would not only stabilize state finances, it would also make North Carolina more competitive, Cowell also said in the speech.
These reforms would attempt to get away from the up and downs North Carolina has seen in tax revenue over the past two decades. The basic framework for the state tax code was set in the 1930s, and the state’s economy has long since moved away from tobacco and textiles as drivers of the economy.
Cowell said, “I commit to being a leader on tax reform,” but she also mentioned the numerous attempts to make significant changes over the year have gone nowhere. “It’s a strange spring ritual we seem to do every year,” she said.
The NC Justice Center, a liberal advocacy group, has suggested fixes to the budget similar to Cowell’s plan. In a report on their website they list recommendations for tax changes:
* Maintain primary reliance on progressive income tax
* Have a minimum of five income brackets and index them for inflation
* Broaden the base of income to which the rates are applied
* Lower all rates, but substantially lower the bottom rates
* Enhance refundability of credits for low-income taxpayers
* Expand to cover more personal services
* Eliminate ineffective caps and exemptions
* Lower the rate
Corporate Income Tax
* Eliminate ineffective exemptions and credits
Adopt combined reporting strategy for eliminating loopholes