Tax reform bill OK'd in NC House, Senate - WNCN: News, Weather

Tax reform bill OK'd in NC House, Senate

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RALEIGH, N.C. -

A tax reform plan introduced Monday by GOP leaders received an initial OK from both the state House and Senate Tuesday.

The House voted 77-38 Tuesday for the tax plan after debate was cut off by Republicans after less than 30 minutes. The Senate voted 32-17 in the bill's second reading.

More debate and another vote are expected Wednesday, when the measure is likely to pass.

Gov. Pat McCrory says the tax reform will take the state from 44th in the nation to 17th in the nation as far as tax competitiveness. Lawmakers hope the reform attracts people and large businesses to the state, and ultimately creates jobs.

House Majority Leader Edgar Starnes says the package will benefit the average citizen and every business in the state.

The bill would reduce corporate and individual income tax rates and expand the sales tax base slightly.

According to an analysis by the legislature's non-partisan staff, a family of four earning $40,000 per year, filing jointly, would save $100 per year. That same family of four, earning $150,000, would save $750 per year. And a family of four, earning $250,000, saves $2,400.

One of the biggest changes is cutting the corporate tax rate from nearly 7 percent now to as little as 3 percent by 2017 if tax revenue grows.

"There are two pieces to the legislation -- individual and corporate," explained Mark Breakfield, a CPA with Chapel Hill-based Blackman & Sloop and chairman of the N.C. Association of CPA's Tax Committee. "The individual piece will probably apply to most. ... We are changing from a graduated tier rate to a flat tax.

"What that flat tax is, is in 2014 the tax rate will drop to 5.8 percent. Now how does that affect the common person? Well it varies depending on what you're income level is."

The bill would also cap mortgage interest and real estate taxes at a $20,000. Anything over that cannot be deducted as it could be in the past.

An increase in sales tax would be applied to electricity, movies and service contracts.

Democrats say the bill helps the wealthiest and large out-of-state corporations at the expense of working families. Democrats also argue that state lawmakers would have $2.4 billion less available for government spending over the next five years.

Charlotte Huffman

An award-winning journalist with an investigative edge, Charlotte has driven legislative change with reports on workplace safety concerns and contaminated groundwater. Contact our Investigative Team anytime HERE. More>>

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