According to this N&O article, Gov. McCrory’s office has weighed in this week on the tax reform negotiations. Labeling it an “analysis,” McCrory’s office outlined details of an option to reform NC’s tax code. The details revealed suggest McCrory is staking out some sort of middle ground, while leaning a little more towards the House plan.
The document that State Budget Director Art Pope recently sent to select House lawmakers outlines a concept that would gradually reduce state income taxes and expand the sales tax to dozens of additional services, such as car repairs and appliance installations. McCrory reviewed the alternative proposal before it was shared with lawmakers, but his office was careful to say he did not endorse it.
In the first year, the plan is revenue neutral, though an analysis from the governor’s office shows it could add state tax dollars. In the next three years, the cuts to state revenues from tax breaks are modest, limiting spending by a fraction of what House and Senate Republicans leaders are proposing.
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The outline proposes a flat 5.6 percent personal income tax in 2016 – between the House’s suggested 5.9 percent and the Senate’s 5.25 percent at full implementation. The current system is tiered by income bracket with the highest rate at 7.75 percent. It does not include a state tax on Social Security income, which the Senate is proposing.
The scenario envisions lowering the current 6.9 percent corporate tax rate to 5 percent in 2016, which is identical to the latest House plan. But Senate Republicans want to go much further, eliminating the tax entirely in 2017.
It also includes a cap on nonprofits’ sales tax break at $100,000 in 2016, mirroring the Senate plan. In the House plan, nonprofits keep their full exemption, reflecting pressure from churches, hospitals and other nonprofits that worry that any change will severely limit their ability to operate.
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