North Carolina developed its current system of taxation during the revenue reforms of the Great Depression, seeking to keep state government afloat at a time of widespread hardship. It depended — and still depends — on a relatively high income tax rate and was designed to reflect an economic system driven by agriculture and manufacturing, textiles and furniture.
Such a structure does not reflect an “ideas” economy or one that produces more services than goods, as exists in North Carolina, and therefore the calls for comprehensive tax reform are well placed. However, any proposal that attempts to move the burden for supporting Raleigh squarely on the shoulders of the least fortunate — as the N.C. Senate plan would do — cannot be viewed as a serious answer.
Last week, N.C. Senate President Phil Berger formally announced his proposal for comprehensive tax reform, putting in writing many of the rumors swirling about such a plan. If approved, it would eliminate the personal income tax, corporate tax and business franchise fee in what the Eden Republican claimed would be the largest tax cut in state history.
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