After months of pledges, proposals, debates and compromise, North Carolina Republican leaders rolled out tax reform this week. How effective is it? Let’s wait to answer that when the jobs start rolling in.
The impact of flat personal and corporate income tax rates is likely to mean more money in your paycheck. But putting a dollar amount on the savings depends largely on your salary. A single person who makes $250,000 a year will save $4,000 annually, according to a legislative analysis of the plan. A married couple with two children making $60,000 annually will save $84 a year.
Meanwhile, sales taxes will be added to the price of electricity, movie tickets and service contracts on items such as computers and televisions. The plan would result in a decrease of $500 million in revenue for the state during the next two years.
It’s safe to say that Gov. Pat McCrory, N.C. House Speaker Thom Tillis and N.C. Senate President Pro Tem Phil Berger have high hopes for economic recruiting efforts.
N.C. Commerce Secretary Sharon Decker said the cuts will make North Carolina “much more comptitive not only in the Southeast but also all around the world.”
Let’s hope so. The state’s 8.8 percent unemployment rate remains the fifth-highest in the country. McCrory pledged before taking office in January that his administration would work to make the state’s unemployment rate than South Carolina’s by the end of 2013 and to make it the lowest in the Southeast by the end of his first term. South Carolina’s jobless rate in May was 8 percent, so we have a ways to go.
No one wants to pay more taxes, but we worry that other changes in the reform package might have a discouraging ripple effect, particularly in Eastern North Carolina.
For example, utility rates already are higher in Rocky Mount and many neighboring towns, as a result of debut incurred by ElectriCities. A lower tax rate sounds nice, but will it really help the Twin Counties compete for industries that need high levels of electricity to operate?
And with $500 million in additional state funding cuts coming down the pike, we worry how competitive our public schools will seem to a company that needs a well educated workforce. Good schools are important to good employers looking at locating in an area.
It’s too early to judge the reform plan at this stage. Let’s hope the governor’s dreams of more industries and jobs will alleviate the concerns some of the rest of us have about his plan.