North Carolina State Treasurer Janet Cowell should be praised for demonstrating leadership on reforming the state’s revenue system as part of a balanced approach to closing the state’s estimated $3.7 billion budget shortfall next year.
In a speech before the Greater Raleigh Chamber of Commerce on Wednesday, Cowell stated that,
“If we, collectively, working with the General Assembly, don’t fundamentally reform the tax code, then the upcoming legislative session will be a failure… I am optimistic that 2011 can be the year where we can meet the difficult short-term challenges and create the structural financial stability needed for the future.”
The State Treasurer’s plan, like several tax reform and modernization commissions over the past decade, calls for broadening the bases of the state’s major sources of tax revenue: the personal income tax, the state sales tax, and the corporate income tax. Broadening the bases of these taxes could enable the state to raise additional revenue–while being revenue neutral relative to the state’s economy–without raising tax rates and better aligning tax bills with ability to pay.
Similar tax reform packages have, in the past, had bipartisan support. Given the importance of taking a balanced approach to closing the state’s budget shortfall, lawmakers would be well advised to take the opening generated by Treasurer Cowell’s reform plan.