There was talk after the Republicans took complete control of North Carolina state government for the first time since Reconstruction that there'd be no limit to the lunacy coming out of the General Assembly. Indeed, I got at least one Kosmail suggesting that we were about to become South Fitzwalkerstan. Well, there's reason to hope today that things won't get too off the wall in Raleigh.
Last week, state senate president pro tem Phil Berger proposed a radical overhaul to the state tax scheme. Among other things, he proposed abolishing the state income tax--and making it up by raising the state sales tax, effectively pushing the tax burden to the poor. It's gotten well-deserved scorn from Democrats, but earlier today the state's most prominent Republican donor let it be known that he doesn't think this is a good idea either. Art Pope, who is now Pat McCrory's budget director, thinks Berger's idea is a loser.
Pope said the state’s current tax system is plagued by “holes and problems” – but the idea of abolishing personal and corporate income taxes by increasing the sales tax and levying the tax on dozens of duty-free services creates more concerns.How significant is this? For years, Pope was North Carolina's answer to the Koch brothers. He bankrolls the Civitas Institute, the state's leading conservative think tank.
“Maybe if you were designing a tax code from scratch, you may want to look at a broad-based consumption tax,” Pope told a reporter roundtable at UNC-Chapel Hill’s journalism school Wednesday. “To go there from where we are now, I think, is very difficult to do and has lot of impracticalities.”
In particular, Pope cited a concern that the higher sales tax is “absolutely, no doubt” regressive, meaning it would hurt low-income taxpayers the hardest. He said it amounts to a gross income tax “without any regard to whether you are making any money.” And he worried about upsetting the current three-tier system of income, sales and properties taxes, calling it “fairly balanced.”
McCrory is due to release his budget in March, and his own tax plan may be included. If this is any indication, one can hope that Berger's crazy tax proposal will die on the vine.