North Carolina finally is talking seriously about tax reform

system that was set up in the 1930s based on an economy driven by manufacturing and agronomy needs a complete revamp. Study committees, lawmakers, economists and others have talked about reform for 20 years. Instead of making real changes, we've ended up with an even more convoluted, complicated system and less transparency than we had to start with. Despite good intentions, tax reform has not happened because it's hard and it's complicated. In order to tackle it, I suspect we'll have lots of ideas on the table.

The Senate proposal is based on revenue collected through sales tax while eliminating corporate, franchise and income tax and raising the sales tax rate to 8.05 percent. Concerns include a new business tax generating twice the revenue derived from the corporate and franchise tax, a new tax on real estate transactions and asking businesses that have never done so to be state government's tax collectors.

Another proposal would eliminate corporate, estate and state sales tax altogether and be based on an Unlimited Savings Allowance (USA) consumption tax replacing the personal income tax. Here's how it would work — take your income, deduct all charitable giving and savings, assume you spent everything else. On that remaining amount, you'd pay a flat rate of 8.5 percent. A study shows this plan would create 80,000 new jobs in the first year it was in place. Concerns about administration seem to be solved by setting up a Carolina USA through participating financial institutions to ensure accurate reporting and accountability. The plan eliminates tax discrepancy between internet sales and brick and mortar stores and puts the government in charge of collecting it's taxes.

Lots of talk, ideas, debate and vetting of numerous plans hopefully will result in comprehensive tax reform that is simple, transparent, fair, provides stable revenue and, most importantly, will encourage economic growth and job creation. The Senate has done a good job of starting the debate on real tax reform. It's a challenging job, but substantive, thoughtful tax reform is doable. Let's get started.

Below are links to several resources to help you understand this important issue.


July 18, 2013: Most Households Gain from Tax Reform In a Carolina Journal Online column, John Locke Foundation president John Hood says most households will experience tax relief from tax reform and that the resulting economic growth will further boost job creation and personal incomes across the board.

July 17, 2013: N.C. Tax Reform Plan 'Blew Other States Away,' Analyst Says In a Carolina Journal Online article, Associate Editor Barry Smith writes that national tax experts see North Carolina's tax reform package as the most significant plan likely to be approved in 2013.		July 16, 2013: McCrory, Legislative Leaders Announce Historic Tax Reform In a Carolina Journal Online article, Associate Editor Barry Smith gives an update on how the governor and Republican leaders in the legislature assess the status of tax-reform legislation for 2013.

July 16, 2013: Tax Reform Part of Broader Plan In a Carolina Journal Online column, John Locke Foundation president John Hood stresses that there are more things than just tax reform to accomplish to make North Carolina a competitive player in the region and the nation.		July 3, 2013: Resolving the Tax-Reform Impasse In a Spotlight research report, John Locke Foundation president John Hood writes that reports of a House and Senate impasse on important tax reform legislation is overstated and that the two sides are close to an agreement.

June 26, 2013: Lawmakers Right on Corporate Taxes In a Carolina Journal Online column, John Locke Foundation president John Hood says the state should slash or eliminate the corporate income tax because it is an inefficient, opaque, and economically destructive way to raise revenue.		June 20, 2013: Three Truths of Tax Reform: Senate, House plans would spur growth, create jobs In a Spotlight research report, John Locke Foundation president John Hood argues that the House and Senate tax bills now under discussion in the General Assembly would constitute fundamental tax reform, not just a welcome cut in state taxes for most households.

June 13, 2013: Tax Debate Heading the Right Way In a Carolina Journal Online column, John Locke Foundation president John Hood says that now that both the North Carolina House and Senate have fashioned tax-reform plans and are preparing to hammer out a consensus bill, the outcome looks promising.		June 12, 2013: A Balanced Plan for Economic Growth In a Carolina Journal Online column, John Locke Foundation president John Hood explains how the conservative approach to tax reform is balanced while the liberal approach is not.

June 10, 2013: House Raised Taxes? No Sale In a Carolina Journal Online column, John Locke Foundation president John Hood takes issue with liberal critics of tax reform who claim that the sales tax hike in HB 998 does not more than offset any savings they receive from lower income taxes.		June 6, 2013: Key Points on Tax Reform In a list of key points, John Locke Foundation vice president for outreach Becki Gray gives North Carolinians seven facts and resources to use as they consider the tax reform proposal put forth by the N.C. House of Representatives.

June 5, 2013: House Offers Broad Tax Cut In a Carolina Journal Online column, John Locke Foundation president John Hood explains that the N.C. House version of a tax plan offers broader net tax relief and is friendlier to investment and job creation than the Senate plan.		June 4, 2013: Tackling Tax Reform In a Carolina Journal Online column, John Locke Foundation vice president for outreach Becki Gray argues that the real reason North Carolina needs tax reform is that a more competitive, pro-growth tax system can spur economic growth and ensure long-term prosperity.

May 17, 2013: Assessing the House Tax Reform Plan In a Carolina Journal Online column, John Locke Foundation president John Hood looks into the details of the N.C.House of Representatives' tax reform plan.		May 10, 2013: Assessing the Senate Tax Reform Plan In a Carolina Journal Online column, John Locke Foundation president John Hood looks into the details of the N.C.Senate's tax reform plan.

Feb. 5, 2013: Key to Economic Growth The John Locke Foundation's vice president for outreach, Becki Gray, spells out in this recent Carolina Journal article, just how important tax reform is to North Carolina's economic growth.		Feb. 1, 2013: A Status Report on Tax Reform The momentum for tax reform has increased with the start of the 2013 legislative session. John Locke Foundation president John Hood brings you up to date on the latest developments in this recent column from Carolina Journal Online.

January 2013: A Handy Tax Reform Reference John Locke Foundation analysts have produced a handy one-page guide that explains the benefits of the USA consumption tax for the people of North Carolina. You can see it here and also download and print a PDF version.		Jan. 25, 2013: FAQs on State Tax Reform You may have questions about the various tax-reform proposals for North Carolina. John Locke Foundation president John Hood answers them for you in this recent column from Carolina Journal Online.

December 2012: Another Way to Win Tax Reform John Locke Foundation president John Hood, in a column that appeared in Business North Carolina, argues that the state's uncompetitive tax structure is a serious factor inhibiting our success in the 21st-century economy.		Dec. 28, 2012: Three Key Points On Tax Reform John Locke Foundation president John Hood argues in a Carolina Journal Online column that the cost of taxation needs to be more transparent to voters, and that biases and preferences in the code must be eliminated for North Carolina to become a more attractive place to live, work, save, invest, and create new jobs.
CJ Tax Reform Stories The editors of Carolina Journal have compiled their print and online stories on tax reform in a special series at Carolina Journal Online where they will be available for ready reference.		First In Freedom In the first chapter of the John Locke Foundation's recently published book, First In Freedom: Transforming Ideas Into Consequences for North Carolina, the JLF's Roy Cordato applies the principles of pro-growth tax reform to North Carolina's problematic tax code.
Beacon Hill Institute Policy Study Using its North Carolina State Tax Modeling Analysis Program (NC-STAMP) the Beacon Hill Institute at Suffolk University found that two consumed tax scenarios would be a major tax improvement to the state economy.