The NC Senate yesterday afternoon introduced a measure to cut income taxes while modestly expanding the sales tax base. On net the changes would result in a $1.9 billion tax cut over the next five years. The tax changes were rolled out technically as changes to an existing bill – HB 117 The NC Competes Act.
WRAL has an overview of the changes here, with the highlights including:
- Lowering the personal income tax rate from 5.75% to 5.5%, and increasing the standard deduction by several thousand dollars over the next few years
- Guarantees the corporate tax rate drops to 3% by 2017 – current law makes the corporate tax cuts contingent upon certain revenue goals being met
- Moves to a single sales factor for taxing multi-state businesses, currently they are taxed on a formula that factors in sales, payroll and property
- Expands the sales tax base to include items like veterinary services and installation, repair and maintenance of tangible personal property
- The measures also tweaks the corporate welfare JDIG program
Forbes already weighed in with praise on the proposal, saying it would “build upon the historic tax reform” passed in 2013, as did Civitas – applauding a plan that would enable citizens to keep more of their hard-earned money and make North Carolina more competitive for jobs and investment.
The “committee substitute” bill has not been posted online at the time of this writing, so it is not yet determined if the rest of the crony handouts and targeted tax credits still remain in HB 117 – the original version of which was named a Civitas “Bad Bill of the Week.”