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The Future is Now – A Plan to Modernize North Carolina’s Revenue System

The NC Budget & Tax Center’s comprehensive revenue reform plan covers how best to modernize North Carolina’s outdated revenue system, which was built for a 1930s economy, while maintaining funding for vital public investments that fuel prosperity.

The plan outlines how North Carolina can create a modern revenue system that improves long-term adequacy, minimizes volatility and ensures equity so that the state can invest in North Carolina’s shared prosperity.

The significant flaws of the current revenue system undermine the ability of the state’s public structures to support economic recovery in North Carolina. Research shows that revenue reform can improve the economy’s ability to grow and innovate in the long term.

BTC’s revenue modernization plan also minimizes the devastating impact of a cuts-only approach to the budget shortfall by restoring nearly $1.3 billion in revenues lost during the Great Recession, thereby helping to set North Carolina on a path to economic recovery.

Highlights of the Plan:

– Broaden the base of the personal income tax and make it more progressive, including converting deductions to credits and doubling the state Earned Income Tax Credit

– Broaden the base of the sales tax to capture a greater share of economic activity, reduce the state sales tax rate from 4.75 percent to 3.75 percent

– Close corporate tax loopholes and eliminate ineffective business incentives

– Implement reforms to regularly and comprehensively evaluate state spending embedded in the tax code

3 Comments

  1. Tothepoint

    February 22, 2011 at 12:46 pm

    Highlights of the Plan (or what it really means):

    -Increase taxes on people who are already carrying most of the burden (rich people have too much money anyway, they shouldn’t have a right to that. They need to work harder so others don’t have to).

    -Increase entitlement giveaway, EITC, to increase welfare spending (on lottery tickets, beer, and TV’s). Its just a money giveaway, who needs controls or systems to ensure it is being used for the right reasons.

    -Increase taxes on North Carolinians purchases because if they can afford to buy it, they can afford more taxes.

    -Chase businesses out of the state and prevent new investments by those that remain. Greedy corporations shouldn’t be allowed to make returns on their investments because more taxes are needed to support higher spending (hey, its the people’s money anyway).

    Implement reforms to ensure that taxes can go up each year as spending is increased. If working people and businesses earn more, be sure to grab that when its available.

  2. nathan

    February 22, 2011 at 1:16 pm

    I have lived in four different states and have always heard this canard about how taxes on wealthy and business people will “chase” those businesses out of state to some other low-tax haven. What’s strange is that I have seen it consistently work out in what must be completely illogical ways, Tothepoint. Turns out that businesses really like having an educated workforce, and a dependable infrastructure, and a well funded safety net. It’s good business sense, and not just fair and equitable.

    Oh yeah, it’s also fair and equitable.

  3. Tothepoint

    February 22, 2011 at 2:56 pm

    Endless spending and increasing taxes have nothing to do with an educated workforce and dependable infrastructure.

    Lets see. How many large manufacturing plants have located in the north were taxes are high, social service spending is out of control, and states are broke.

    As for a “well funded” safety net, I guess the concept and description is in the eyes of the beholder for there is never enough.