National tax group praises NC legislators, urges more reform

By MITCH KOKAI
Carolina Journal
Posted 5/20/22

A letter from the head of a national tax reform group touts North Carolina lawmakers’ “leadership in advancing pro-growth tax policies.” The letter released Thursday, May 19, calls for legislators to consider even more tax-related reforms as they begin a new session.

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National tax group praises NC legislators, urges more reform

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A letter from the head of a national tax reform group touts North Carolina lawmakers’ “leadership in advancing pro-growth tax policies.” The letter released Thursday, May 19, calls for legislators to consider even more tax-related reforms as they begin a new session.

“It’s often discussed how North Carolina is a national model for smart tax reform, but what the Old North State doesn’t get enough credit for is how much it has also been a model for conservative budgeting and spending restraint,” writes Grover Norquist, president of Americans for Tax Reform.

“As politicians in Washington and other states have shown, it’s much easier to cut taxes than it is to also keep spending in check,” Norquist adds. “Yet you and your colleagues have commendably managed to do both.”

Norquist urges lawmakers to continue “spending restraint,” with state government growth proceeding at a “responsible pace.”

He also identifies potential reforms. Lawmakers could consider them this summer or in 2023.

First, Norquist urges lawmakers to consider moving up the pace of state income tax rate cuts. The rate drops this year from 5.25% to 4.99%. Additional rate cuts are planned between now and 2027, when the rate will hit 3.99%.

Moving up the date of the next rate cut “would make for a great use of the current surplus,” Norquist writes. “North Carolina is, after all, vying with nine no-income-tax states for jobs, investment, and new residents; as well as competing with the states making progress toward becoming the 10th no-income-tax state, such as Arizona, where lawmakers recently cut the state income tax to a flat 2.5%.”

Norquist urges lawmakers to repeal the state’s professional privilege tax. “North Carolina is an outlier in even having this tax on the books, which is only levied by five other states,” he writes. “Repealing this tax, aside from saving North Carolinians money, will send a message that North Carolina is a state whose leaders view the ability to earn a living as a right, not a privilege.”

The letter calls on lawmakers to set new limits on ballot measures dealing with tax and spending issues. “The recent elections … demonstrate why it would be a good idea to pass state legislation requiring all bond and tax measures to be placed on the general election ballot, when turnout will be higher and a greater share of the electorate will be able to decide,” Norquist said.

ATR’s president cites Greensboro’s school bond referendum, with 45,399 voters approving a $1.7 billion bond “for which all taxpayers in the county, whose population is greater than 532,000, will be on the hook.”

Another recommendation also targets bond measures. “I encourage you to pass legislation requiring that all bond measures list the annual interest costs associated with the proposed bond,” Norquist writes. “You and your colleagues have been responsible stewards of taxpayer dollars, and it’s important for the overall state tax climate that local officials follow your lead.”

Norquist suggests further regulatory reforms. “As one of the fastest-growing states in the country, thanks in large part to the very hospitable tax and regulatory climates you have spent a decade significantly improving, it’s particularly important to look for reforms that will increase access to health care and reduce costs for patients by reducing regulatory barriers.”

North Carolina’s reforms have had an impact beyond the state’s borders, Norquist argues. “Not only have your efforts greatly aided North Carolinians, but the benefits also extend beyond state lines, as your reforms have served as a model that other states have emulated or are seeking to mimic.”

The North Carolina General Assembly returned to work Wednesday. Legislative leaders have said they hope to complete their regular short session in as few as six weeks.

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