The NC Budget & Tax Center’s comprehensive revenue reform plan covers how best to modernize North Carolina’s outdated revenue system, which was built for a 1930s economy, while maintaining funding for vital public investments that fuel prosperity.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