Monday, April 30, 2007

Tax Reform Delayed in NC

Inspired by what I learned at the rally for a state earned income tax credit held by ACORN and Working Families Win a couple of weeks ago, I've been trying to pay closer attention to news about our local and state taxes here in NC.

I was a bit surprised to find out that a panel of business and government leaders, charged with making tax reform recommendations to the legislature, has decided to delay passing along their conclusions. I don't know how long this panel has been working on the issue, but when I see that they are trying to lift the Medicaid burden from counties and shift the tax burden off our working poor, I'm not happy with the delay.

WRAL had this on their web site, last night:
The commission was asked to consider how to retool the state and local tax systems as North Carolina has moved from a traditional manufacturing economy to one that relies more on services and Internet-based sales.

Two weeks ago, commission members said their top priorities for tax reform included eliminating the counties' share of Medicaid expenses and reducing both individual income and sales tax rates while expanding what could be taxed.
Basically, the panel is looking at taxing services in North Carolina to help broaden the tax base. Some on the panel think only certain services should be taxed, while others think fairness requires all services should be included if any are taxed at all.

When it comes to easing or eliminating the amount that counties must pay for Medicaid, the panel isn't sure whether money is available to remove this burden from all counties or just the poorest of the 100 counties in the state.

The panel has also said that low income residents could see the amount they pay in taxes eased or eliminated through an increase in the standard deduction. Good, but not good enough. I didn't see any discussion about a state EITC. This delay by the panel might give groups pushing the tax credit for the working poor a chance to be heard before a final decision is made.

It's an interesting piece and I'd like to know more about the panel.

In my research I was surprised to find this little morsel by Jack Betts from last year. It's hosted by the NCSU Institute for Emerging Issues and curiously enough Betts says that tax reform doesn't appear to be a priority for Easley or his staff.
The mere mention of tax reform seems only to drive the governor - or at least his staff - up the wall. It's a good topic to mention if you want to see some serious eye-rolling in the governor's office.
Hmmmm.... Do you think that maybe the panel wasn't feeling a sense of urgency from the state's top CEO to complete this task?

Or maybe, they simply had a hint that this news was about to break:
Legislative leaders received more good news about North Carolina's financial picture Monday, learning the state has $260 million more than had been expected in its coffers from April tax filings.

The extra money means North Carolina has brought in $1.1 billion more than anticipated through the first 10 months of the fiscal year, giving budget-writers more breathing room in forming a two-year spending plan that begins July 1.
Excess cash and lots of it. I'm thinking now isn't the time to back away from reform. Now is the time to find the way to ease the medicaid burden on counties, broaden the tax base and eliminate the undue tax burden on the working poor.

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