McCrory, GOP plan cuts taxes for individuals, companies - WRBL

McCrory, GOP plan cuts taxes for individuals, companies

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Gov. McCrory makes a point at Monday tax news conference Gov. McCrory makes a point at Monday tax news conference
McCrory leaves after tax reform press conference McCrory leaves after tax reform press conference
Sen. Phil Berger at tax reform news conference Monday Sen. Phil Berger at tax reform news conference Monday
Thom Tillis (right) addresses tax reform Monday Thom Tillis (right) addresses tax reform Monday
Commerce Secretary Sharon Decker Commerce Secretary Sharon Decker
RALEIGH, N.C. -

Gov. Pat McCrory and the leaders of the North Carolina General Assembly unveiled their new proposals for the North Carolina tax code Monday, cutting rates for personal and corporate income tax.

"This tax reform plan accomplishes many of our common goals," McCrory said.

He said the tax reforms will encourage productivity and is fiscally responsible.

"More than anything, this tax reform encourages economic growth and job creation," McCrory said. "It sends a positive signal … that North Carolina is open for business"

Senate President Pro Tempore Phil Berger and House Speaker Thom Tillis both attended the announcement, which had the feel of a celebration as Republican leaders celebrated the proposal and spoke of how it showed the different branches of government could work together.

"We've done something no legislature has done since the Great Depression," Tillis said.

The plan will lower income tax rates for all taxpayers to 5.8 percent in 2014. Currently, the three-tiered tax rate ranges from 7.75 percent to 6 percent.

The tax code will reduce corporate taxes from 6.9 percent to 6.0 percent in 2014 and eventually down to 3 percent in 2017, provided certain conditions are met.

How much that will cost the state is unclear. Tillis said the package would result in roughly $500 million less in revenue through mid-2015.

McCrory has made tax reform a key part of his proposals but the Senate and House have offered differing proposals for tax reform.

House and Senate Republicans worked into the weekend to craft a deal between competing tax plans between the chambers. Tillis, Berger and McCrory pledged several months ago to work toward modernizing and simplifying the tax code this year, largely by cutting tax rates and eliminating tax exemptions that critics call loopholes.
    
The tax negotiations have delayed the passage of the state budget.

Some Democrats, meanwhile, had reservations.

"Their plan gives huge tax breaks to out-of-state corporations and millionaires while balancing those breaks on the backs of the middle class and working families," House Minority Leader Larry Hall, D-Durham.

Tax reform details (as provided by Gov. Pat McCrory's office)

Personal Income Tax:

  • Reduces and simplifies the three-tiered state personal income tax from the current maximum rate of 7.75 percent and minimum rate of 6 percent to 5.8 percent in 2014 and 5.75 percent in 2015.   
  • Increases the standard deduction for all taxpayers, applied to the: 
  1. ​First $15,000 of income for those married filing jointly
  2. First $12,000 of income for heads of household
  3. First $7,500 of income for single filers;
  • Retains the state child tax credit and increases it for families making less than $40,000;
  • Offers a $20,000 combined maximum deduction for mortgage interest and property taxes;
  • Makes charitable contributions fully deductible;
  • Protects all Social Security income from state taxes.

Corporate Income Tax:

  • Reduces the corporate income tax from 6.9 percent to 6 percent in 2014 and then to 5% in 2015 a 29 percent rate reduction.
  • If the state meets revenue targets (i.e. if tax revenue grows due to a growing economy), the corporate income tax will drop to 4 percent in 2016 and 3 percent in 2017.

Other Highlights:

  • Caps the state gas tax; 
  • Eliminates North Carolina's death tax;
  • Preserves the sales tax refund for nonprofits.
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