With seven bills already introduced into the General Assembly this session and numerous organizations calling for tax reform, its shaping up to be the year to get new rules on our books.
And it couldnt come soon enough. Our tax code has not fundamentally changed since the 1930s when Roosevelt was president and our economy was driven by manufacturing and agriculture. Since then, North Carolinas economy has evolved, but our tax code has not.
As a result, our states revenue stream has become increasingly unpredictable, especially during economic downturns. In recent years, North Carolina lawmakers have been forced to choose between making deep cuts to basic services like education, public safety or transportation or imposing temporary tax increases to make up for budgetary shortfalls.
North Carolina has the highest personal income and corporate tax rates in the Southeast and the 17th-highest total tax burden in the nation, creating a difficult climate for economic growth and job creation. Even more alarming, current forecasts show that if we fail to modernize our tax code, North Carolinas state government will not be able to meet basic obligations in the next three to five years.
This roller-coaster revenue stream affects North Carolinians in real ways. Whether its a temporary sales tax increase one year or a reduction in teachers the next, these effects are hitting North Carolinians hard.
The good news is that it can be fixed and reforming our tax code is the answer.
Thats why the N.C. Association of CPAs decided to launch the Tar Heel Tax Reform initiative a platform to help state residents understand the need for tax reform and to monitor the debate. As the states CPAs, we must help North Carolinians understand why tax reform is critical to our well-being and why it will benefit all of us in the long run.
The nonpartisan N.C. Association of CPAs is not promoting specific legislation, but we are urging lawmakers to ensure that three key principles guide tax reform efforts.
• We must make sure that any reform effort creates a more reliable revenue stream.
Real reform should create a transparent tax code that taxpayers can understand.
• Tax code reform must be fair.
We are encouraging lawmakers to continue their important work on tax reform this session. While organizations speaking out on tax reform may have different approaches, one thing is clear: Everyone from across the political spectrum agrees tax reform is needed.
North Carolina cannot afford to wait until the next economic downturn to get our financial house in order. The time is now, the momentum and support of the issue are apparent and tax reform is the solution to protect us and our states economic future.
Jim Ahler is chief executive officer of the N.C. Association of CPAs. Rollin Groseclose, a shareholder with Johnson Price Sprinkle PA in Asheville, serves as chair of the NCACPA Tax Modernization Task Force.