The much-anticipated joint House-Senate Finance study is underway this morning. For those of you who may have forgotten, the purpose of these meetings is to take up the long-neglected effort to modernize and reform North Carolina’s outdated tax code. The lead off speaker is Dr. Bill Fox of the Center for Business and Economic Research at the University of Tennessee Knoxville. Fox is patiently walking committee members through some of the basics of understanding North Carolina’s tax system – particularly the sales tax.
His overriding message is one we’ve heard before: “broaden the base and lower the rates.” Get rid of all the exemptions – even the well-intentioned ones like the exemptions on food purchases or the purchases of nonprofits – and then lower the rates significantly. This will make a healthier, more robust, and less volatile sales tax system and, he argues persuasively, overall economy.