Legislators heard a call Tuesday to further expand sales taxes and eliminate the capital stock tax – a conservative think tank’s proposal for continuing the state’s tax code overhaul.
The Tax Foundation, based in Washington, D.C., presented its report on North Carolina’s business tax climate, painting a rosy picture of recent Republican-sponsored cuts in personal and corporate income taxes while calling on the legislature’s Revenue Laws Study Committee to do more.
“North Carolina is one of the states that other states are looking at and want to emulate in many ways,” said Scott Drenkard, the foundation’s director of state projects.
Drenkard added that expanding the sales tax to services would better reflect the modern economy, in which more consumer purchases are of services compared rather than goods. Expanding the sales tax base would reduce distortions in economic decisions by treating consumer purchases the same across the board; it would also allow the tax rates to remain low – or possibly be reduced.
Also recommended was an elimination of the state’s tax on capital stock, a tax that still exists in only 18 states. The tax is levied on the overall net worth of a company, and was described by Drenkard as a “tax on breathing.”
To learn more about the real story of the state’s fiscal history, go to our Budget Policy Guide.