- The Progressive Pulse - http://pulse.ncpolicywatch.org -

#NCTaxReform Blog Series: Seizing the Opportunity

Written by Cedric Johnson, Policy Analyst, NC Budget and Tax Center [1]

North Carolina policymakers have pledged to make revenue modernization a legislative priority in 2013. The policy decisions that they make – and the principles that guide them – will be the foundation for how we collectively pool our resources to educate our children, protect our communities, and support economic opportunity for generations to come.

Since we began, the Budget & Tax Center has advocated for modernizing North Carolina’s tax system to make sure that community needs across the state are consistently met in good and bad times. We have analyzed and advocated for policies that would do so by asking all North Carolinians to contribute according to their means. In our work, it has become clear that tax reform that is truly modernizing can not only address our state’s fiscal challenges but also put the state back on a path to shared prosperity.

To be sure, the Great Recession and the subsequent policy choices made in the face of our state’s fiscal challenges have made all too clear the problems with North Carolina’s revenue system. Tax collections as a percentage of personal income [2] are near a 40-year low for North Carolina, which challenges the state’s ability to adequately invest in important public structures. But beyond its inadequacy for our current and future needs, our tax system is out-of-date, upside-down, and unaccountable [3].

It is these practical problems —not theoretical ones — that policymakers must address in their efforts to pursue true and comprehensive reform.

Moreover, efforts to modernize the state’s revenue system must be guided by principles that are broadly recognized as indicators of a sound revenue system: adequacy, equity, stability and elasticity are primary among them, with simplicity and efficiency also being important.

Each of these principles will be highlighted in a series of blog posts this week and each will serve as guideposts against which BTC will assess tax proposals moving forward.

North Carolina cannot afford to forego comprehensive revenue reform that addresses the real problems with our revenue system nor can we afford to get this wrong. A modern tax system will be essential if North Carolina is to remain a leader among states: a leader that, in this century, must redouble our efforts to support an innovative economy that strives to expand opportunity for all.