A Raleigh-based think tank with close ties to the N.C. Republican Party is advocating the elimination of the state income tax.
The Civitas Institute, funded by the influential family of Art Pope, concludes that replacing the income tax with a “consumption tax” will stimulate economic and jobs growth in North Carolina. Expanding the sales tax to include services has been discussed in the General Assembly for years.
The Civitas organization reports that elimination of the income tax is being discussed by Legislative leaders and could be on the agenda in the upcoming session which begins January 7. Replacing revenue from the state income tax will be a significant change in the code to support a $20 billion annual budget. Options might include increase in so-called “sin taxes” – on tobacco and alcohol products. Revenue sources also include franchise taxes. The study includes a real estate conveyance fee and closing of loopholes.
Republican legislators have argued that reducing or eliminating income taxes will make the state more competitive in recruiting businesses. Some states including Florida and Tennessee have eliminated income taxes but have high sales taxes.
In years past, the North Carolina General Assembly operated with a seniority system, rewarding representatives and senators who were re-elected for several terms.
The 2013 session will be different, with some legislators serving less than three terms in top positions.
Rep. Nelson Dollar of Wake is an example. Speaker Thom Tillis has announced Dollar will be the senior chair for the budget-writing Appropriations Committee, bypassing Rep. Mitchell Gillespie of McDowell, a veteran appropriations chair and eight-term member. Gillespie will continue to be a top appropriations chair, along with Reps. Linda Johnson, Bryan Holloway, and Justin Burr.
Chairing the Appropriations Subcommittee on Education will be Reps. Hugh Blackwell, a veteran, and Craig Horne of Union and Chuck McGrady of Henderson. Horne and McGrady will be serving their second terms.
Dan Soucek, a second term senator from Watauga, will join veterans Tom Apodaco of Henderson and Jerry Tillman of Randolph as top chairs for the Senate Education/Higher Education appropriations subcommittee.
Other leadership news: Rep. Larry Hall of Durham will be the Minority Leader for the Democratic caucus which has shrunk in the House. Hall will serve as spokesman for Democrats in a Legislature in which Republicans have a veto-proof majority … Rep. Edgar Starnes, who has serve in the House for 10 terms, will be the majority leader, replacing Paul Stam who will be Speaker Pro-Tem … Robert Brawley of Iredell who is returning to the House after a 10-year absence will serve as a House Finance Committee Chair, along with Reps. Julia Howard of Davie and Mitchell Setzer of Catawba.
Gov. Pat McCrory’s first budget for the General Assembly will be a significant event. It is expected to give some clues as to how his priorities dovetail with the more conservative members of his party. Will it include tax reform proposals? Changes in the education spending programs, i.e. charter schools, maybe even vouchers for those sending children to private schools. As mayor of Charlotte, the governor was a strong advocate for public transportation.
With state’s economy still sluggish, a strong core of the Governor’s party will be pushing for less spending.