NC Senate delays final vote on tax overhaul
The North Carolina Senate delayed a final vote on a tax overhaul plan Tuesday to work out differences with House members and Gov. Pat McCrory.
Senate Leader Phil Berger, R-Rockingham, said the scheduled vote was being put off for talks with McCrory and the House, which already passed its own proposal. Berger said the proposal will be added to the Senate's Wednesday schedule and could require an additional vote if potential changes are significant.
The Senate's plan tentatively passed last week over near lockstep opposition from Democrats and the disapproval of Sen. Bob Rucho, R-Mecklenburg, who crafted an earlier plan that was more expansive. He resigned as co-chairman of the Finance Committee, saying the latest plan failed to make major changes to the sales tax code because of the influence of special interests who would lose preferential treatment.
The latest Senate plan is one of many Republican proposals aimed at lowering corporate and income taxes in exchange for eliminating some deductions and a broader sales tax. The Senate plan cuts taxes by billions through a gradual repeal of corporate taxes and lower income tax rates.
Proponents say it will boost the economy in a state with the fifth highest unemployment rate in the country and the highest overall tax rates in the region. Critics have said it is not true tax reform because it doesn't make major changes to the sales tax code. Others say it will severely hurt state and local public services.
The Senate plan goes farther than the House plan. It would repeal corporate taxes by 2017 and lower income taxes to a flat 5.25-percent rate by 2015. By the 2017-18 fiscal year, personal income and corporate tax cuts in the Senate plan would total $2.3 billion a year. The Senate plan would raise about $750 million less in revenue when fully implemented than the House proposal, which would raise $570 million less than the current tax structure.
The House plan imposes a $25,000 limit on deductions from mortgage interest and property taxes. The Senate plan eliminates itemized deductions completely, along with the standard deduction, which totals $12,000 in the House plan.
The deduction changes in the Senate plan have drawn criticism from Realtors, who say it's bad policy to curb benefits that promote a major driver of the economy.
"If you believe that home ownership is good for the economy, which it is, and good for family wealth creation, which it historically has been, then government policy should support it, as it has over the last century," said Mark Zimmerman, chairman of the North Carolina Association of Realtors. "We can get in a debate over that policy, but if you believe home ownership is good then we shouldn't curtail the support of it in our tax policy."
McCrory, who has backed the House version of the tax overhaul, told The Associated Press Monday that he thinks all sides are close to agreement.
Copyright 2013 The Associated Press.