Friday, June 7, 2013 NC HOUSE PASSES COMPREHENSIVE TAX REFORM PLAN House Bill 998 reduces personal, corporate income tax rates Raleigh – Republicans in the North Carolina House of Representatives today passed the “Tax Simplification and Reduction Act” on its second reading, delivering on their promise to comprehensively reform the state’s tax code. The 72-32 vote is the result of months of discussion around a tax system that was built on a 1930’s population model that has subjected North Carolinians to the highest income taxes in the Southeast. “Tax reform is not an event, it is a process,” said House Speaker Thom Tillis (R-Mecklenburg). “During our first session in the majority, Republicans in the House began that process by providing more than a billion dollars in sales tax relief. Today, we took another major step in that process by passing a comprehensive tax reform package that will provide across-the-board tax relief for North Carolinians.” House Bill 998 eliminates North Carolina’s three-tiered personal income tax bracket system (with rates currently at 7.75%, 7% and 6%) and replaces it with a flat 5.9% personal income tax rate. Under the plan, every tax filer would see a reduction in their personal income tax liability. The plan doubles the size of the standard deduction and increases the child tax credit from $100 to $250 for families making less than $100,000. The bill provides a $25,000 combined maximum deduction for mortgage interest and property taxes, while deductions for charitable contributions remain unlimited. Social Security benefits are not taxed under the plan. The measure also cuts business taxes, reducing the franchise tax by more than 10% and shrinking the corporate income tax from 6.9% to 5.4%. The plan would expand the state sales tax to only those services that are provided by entities that currently collect and remit sales tax revenue. Essential goods such as medicine and food would not be subject to the sales tax. “The Tax Simplification and Reduction Act will provide the working families of North Carolina with more dollars in their pocket, and our state will become more competitive for job creation,” said Rep. David Lewis (R-Harnett), the bill’s sponsor. “This comprehensive bill will move our state toward a fairer tax system that will help families prosper and stimulate job creation. It is long overdue, and I am proud of the action taken by the House today.” The bill is expected to receive final approval in the House on Monday, after which it will be sent to the Senate for consideration in that body. A copy of the bill text is attached.
Posted on: Fri, 07 Jun 2013 17:13:44 +0000
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