Tuesday, July 16, 2013

Tax Reform Moves Forward

Several weeks ago the NC House passed a tax reform plan. Shortly thereafter, the NC Senate passed its own version of tax reform. Since then, members of both legislative chambers have engaged in negotiations to determine the best way forward in reforming our tax code.

On Monday, July 15 our leadership in the General Assembly -- along with Governor Pat McCrory -- announced an agreement on tax reform. After thorough discussion and debate, we have agreed on a plan that will simplify our tax code and ease the tax burden on our citizens. This is great news for the economic future of North Carolina.

It is important to remember that tax reform is a process; not an event. This tax reform plan will result in a significant improvement to our economic environment, while laying the groundwork for additional reform in the future.

In fact, the Tax Foundation has said that our tax reform plan will take North Carolina from the 44th worst to the 17th best tax climate in the nation.

Here are the highlights of our tax reform plan:
  • Reduces the personal income tax to a fair, flat rate of 5.8 percent in 2014 and 5.75 percent thereafter.
  • Reduces the corporate tax to 6 percent in 2014, and 5 percent thereafter.
  • Allows standard deductions of $7,500 for single individuals (or those who are married and file separately); $12,000 for head-of-household; and $15,000 for those who are married and file joint taxes.
  • Expands the sales tax to cover some, but not all, services.
  • Exempts food, medicine, and Social Security from taxation.
  • Keeps the mortgage interest and property tax deductions, but caps them at $20,000.
  • Exempts non-profits from taxation with a cap of $45 million.
  • Eliminates the Estate Tax (commonly known as the "Death Tax").
  • Caps the gas tax at 37.5 cents/gallon.
This is a solid, pro-business tax reform plan. As I said, tax reform is a process, and this is an excellent step in the right direction.

Having the opportunity to vote in favor of this tax reform plan was a great honor. Many of our legislators, including myself, campaigned on promises to reform our tax code in a sensible fashion. I believe this plan accomplishes that goal.

Please do not hesitate to contact me if you have any questions or feedback.