NC looks at eliminating income taxes - | WBTV Charlotte

NC looks at eliminating income taxes


The idea of eliminating income tax entirely can sound enticing. But if it goes away, the state will have to make up that money by raising the sales tax significantly.

It's an idea gaining popularity with Republican leaders like Charlotte's own Senator Bob Rucho and by Senate President Pro Tem Phil Berger. They both believe axing North Carolina's personal and business income taxes would make companies more likely to move here.

"Presently, North Carolina's tax system is out of date," Berger says. "It holds back our economic growth. And we need a system that creates jobs, helps the people of our state bring home more in their paycheck."

North Carolina's business tax climate is routinely rated one of the worst in the nation.

"Our tax system here in North Carolina is no longer competitive with the rest of the United States," new Governor Pat McCrory has said. "I do think tax reform is one of the solutions, but it won't be easy."

It won't. McCrory has also expressed interest in eliminating the income tax but his freshly appointed budget director, Art Pope, threw Republicans a curve ball yesterday, telling journalists in Raleigh he thinks that would be a terrible idea.

"It is regressive in nature, absolutely no doubt about it," Pope said. 

Alexandra Sirota is director of the North Carolina Budget and Tax Center, and she says the state would have to create new sales taxes on everything from groceries to car repairs, making life harder on those with low incomes. "Really this isn't tax reform, it's a tax shift," she says.

"You know, I've heard that," Berger says. "But I also know that when you look at the results in other states, particularly those states that have eliminated or don't have income taxes, what you see are states that have created more jobs than other states."

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