Senate President Pro Tem Phil Berger is out of the gate with tax reform. He is calling for reduction, possible elimination, of personal and corporate income taxes and increases in consumption taxes that would mean most services currently exempt to the sales tax, such as auto repairs, haircuts and lawn services, would be taxed.
Caution Senator Berger: sharp curves and slippery roads ahead. You need bipartisan support. Gov. Pat McCrory needs bipartisan support. Lots of folks and lots of interest groups have a stake in the tax code.
No doubt most North Carolinians understand that we have an antiquated tax code based in a past decade where the economy was quite different from today. The Economic Future Study Commission recommended reform 20 years ago. The reason: anticipation of a changing economy. There is agreement on the need to modernize but the devil is in the details. And those details need some level of bipartisan support if for no other reason than political cover.
Republicans may have supermajorities and the Governor’s office now but tax reform without bipartisan support could be an easy messaging win for Democrats heading into 2014. Jack Betts wrote that tax reform will “take a lot of guts.” Changing the tax code and restructuring means having the courage to stand up and stand down a lot of interest groups when another election is right around the corner even if you do get to help those who helped you get elected.
There’s already a messaging vehicle Democrats can ride – that nagging redistricting plan drawn by the Republicans that is still in the courts and could be there a while. Two million North Carolinians were placed into split precincts, five times the number of people in past redistricting efforts.
Changing demographics in N.C. favor Democrats. Policies that hurt large numbers of those constituencies should sound the alarm for Republicans, especially McCrory. Transferring revenue-raising to increasing sales taxes will have a pronounced effect on the poor, and our economy is still very weak. Poverty has been on the rise. McCrory ran as a moderate, level-headed leader who can bring people together. Recent polls show him slipping after appointments of controversial folks. A tax reform package that is neither fair or level will be dumped on his feet. His four year term and future political ambitions will be judged on the quality of the N.C. economy. He needs bipartisan support on tax reform or he could flat line on support.
Jeanne Bonds is a political analyst and an NC SPIN Panelist