Could North Carolina tax changes efforts boost S.C. Fair Tax prospects?

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Those backing a state-level FairTax proposal, which would replace state income taxes with a sales tax, have worked to attract support for their vision of changing the state’s tax codes. Recent events in North Carolina may help the South Carolina FairTax activists make some long-awaited progress.

In recent weeks, leaders in North Carolina state government, including Governor Pat McCrory, N.C. House Speaker Tom Tillis and N.C. Senate President Phil Berger, have discussed the idea of cutting or eliminating the state’s income tax and replacing it with a sales tax, similar to FairTax legislation which has been proposed in South Carolina.

In an  interview with the Winston-Salem Journal last month, McCrory said he believed that “North Carolina’s corporate and personal income tax rates are holding back recovery from the Great Recession because they make the state less attractive to business executives seeking to create jobs.” Yesterday, House Speaker Tillis echoed McCrory’s sentiments while speaking to a group of small business owners near Charlotte.

Also speaking out on this subject yesterday was Forbes, which called for states to end their income taxes, pointing out the recent moves in North Carolina:

Moves like these will likely draw greater attention upon two bills which have been filed in the state House and Senate here in South Carolina - H3116 and S185 -both of which would replace the state’s income and estate taxes with a six percent sales tax.

Aiken County State Rep. Bill Taylor, the primary sponsor of the House bill, told the Blogland that North Carolina’s moves were a signal for state legislators to act on the legislation in Columbia:

If our neighboring state paves the way in tax reform with the elimination of their state income tax, it will only serve as a competitive impetus for South Carolina legislators and business people to realize there is great wisdom to adopting the Fair Tax Act that’s languishing in the legislature.

Anderson County Senator Kevin Bryant, one of the sponsors of the Senate bill, explained he supported the bill because “income taxes punish success and discourage growth. sales taxes put the taxpayer in charge, they decide when and how much they want to spend.”

Lancaster State Rep. Deborah Long signed onto the House bill because she saw the need to make the South Carolina suburbs of Charlotte more competitive for regional business.

John Steinberger, one of the state’s FairTax leaders, told the Blogland the bill would help boost economic development, telling us research studies indicated “a competitive tax system is more effective in creating jobs and growing the economy than using an incentive-based system, since most job creation is in the small business sector.”

Steinberger also suggested the state consider another change in its tax laws with regard to manufacturing: “we need to reduce our manufacturing property tax assessment ratio, particularly on machinery.”

While similar bills have failed to generate much discussion among legislators, these developments could change the game. If North Carolina leaders begin moving to end their income taxes, expect the FairTax bills in South Carolina to draw closer attention by legislators looking to avoid being left behind in the economic development contest.

2013-01-23 18:01:03

Source: http://earlcapps.blogspot.com/2013/01/could-north-carolina-efforts-boost-sc.html