According to the Tax Foundation, "North Carolina made sweeping changes to its tax code during the 2013 legislative session, and built on those reforms in 2014 and 2015 -- enough to move the state from having the 44th best tax code in the country to the 13th best tax code in the country once reforms are fully phased in."
The North Carolina Justice Center sees it differently: "Tax cuts for big, profitable corporations and the wealthy have proven to be the wrong choice for North Carolina. Despite mounting evidence that the 2013 tax plan is holding the state back from critical investments that will strengthen economic opportunity and the economy for the future, policymakers passed another round of tax cuts in 2015."
No matter how one views North Carolina's tax changes, however, it's clear that two state senators have been of major influence in getting them passed: Senate President Pro Tempore Phil Berger (R) and Sen. Bob Rucho (R), co-chair of the Senate Finance Committee. Rucho announced November 5 that he would retire in 2016.
The changes the pair helped to push through include:
- a switch to a flat individual income tax rate;
- a gradual lowering of the individual income tax rate;
- a gradual reduction in the corporate income tax rate;
- broadening of both the individual and corporate income tax rates by eliminating some credits and deductions;
- the expansion of the sales tax base to include more services;
- the elimination of local business privilege taxes; and
- the repeal of sales tax holidays.
Although they worked together, Berger credited Rucho when he announced his retirement. He praised Rucho's "vision and conservative principles, especially regarding tax reform."
"Rarely do you see someone work so hard, and throw themselves so tenaciously into a project or policy they've been tackling," Berger said.
South Dakota Sen. Deb Peters (R), a CPA, is one of the most engaged state lawmakers on state tax issues. She serves not only as the Streamlined Sales Tax Governing Board president, but also as the vice president of the National Conference of State Legislatures. Peters also chairs the South Dakota Senate Appropriations Committee.
"When I put all of those hats together, I don't like increasing taxes, but I do want to make sure that we are doing what we can to collect the taxes that are already on the books," Peters told Tax Analysts.
For many years Peters has been a vocal proponent for congressional action on some type of online sales tax bill, whether the Marketplace Fairness Act or the Remote Transactions Parity Act.
In her NCSL role, she has also been closely monitoring the Internet Tax Freedom Act, which imposes a moratorium on Internet access taxes, and the Permanent Internet Tax Freedom Act. South Dakota is one of several grandfathered states, and if either of these bills passes, the state could lose up to $18 million in revenue, Peters said.
When opponents of an online sales tax bill say it will cause a tax increase, Peters counters that these laws are already on the books and that just because people aren't paying it doesn't mean it's a tax increase -- it means people are avoiding paying taxes, she said.
West Virginia Del. Eric Nelson (R) chairs the interim Joint Select Committee on Tax Reform, which is looking to overhaul the state's tax structure. The committee has been meeting since April and has held 10 meetings to date. Nelson said at the end of October that the committee will hand over all its information to the West Virginia University Bureau of Business and Economic Research to conduct economic modeling for different reform scenarios.
Louisiana Rep. Julie Stokes (R) chairs the Sales Tax Streamlining and Modernization Commission, which aims to streamline state sales taxes. The commission began meeting in August and hopes to give recommendations to the governor for an improved sales tax structure.
New Jersey Sen. Raymond Lesniak (D), who is planning to run for governor in 2017, called for a moratorium this May on the state's economic incentive programs until Gov. Chris Christie (R) produced an analytical report on their effectiveness. A few weeks later, Lesniak rescinded his call for a moratorium, and the state's Economic Development Authority and Rutgers University announced a partnership to create both a one-time and a recurring evaluation of the incentive programs.