Senate out of step with new tax cut plan

Editorial by Rocky Mount Telegram, June 13, 2015.

Republican N.C. Senate leaders last week rolled out a sweeping tax-cut plan that almost undoubtably will extend the legislative session and further delay passage of economic incentives legislation sought by Gov. Pat McCrory.

The GOP leadership inserted the tax changes into the N.C. Competes Act approved along broad, bipartisan lines in March by the N.C. House. The House measure was aimed at extending incentives, tax credits and other tools used to help recruit businesses and industries to the state.

The Senate measure would lower the personal income tax rate from 5.75 percent to 5.5 percent next year and reduce the corporate income tax rate to 4 percent next year and 3 percent in 2017. To make up for the projected $2 billion in lost revenue the cuts would cost the state over five years, the plan would expand the state sales tax to a wide array of services, including advertising, veterinary services and repairing personal property such as automobiles, furniture and appliances. Large nonprofit organizations, such as hospitals, would have their sales tax exemption cut from the first $666 million in purchases to the first $15 million.

The Senate plan appears highly unlikely to be approved by the House, even along party lines – so the measure will end up in a conference committee composed of legislators from both chambers who will have to hash out a compromise version of the two competing bills. Don’t expect those negotiations to reach a deal quickly.

By inserting broad tax changes into an economic incentives bill that enjoyed broad bipartisan support in the House, GOP Senate leaders are unnecessarily placing another delay on providing the McCrory administration the tools it has long been pushing for to help attract the jobs that North Carolina so desperately needs.

http://www.rockymounttelegram.com/opinion/our-views/senate-out-step-new-tax-cut-plan-2906181