As North Carolina considers modernizing its tax system, it should cut taxes on corporations and the wealthy in an effort to attract more jobs to the state, several political figures and economists said Monday.

Speakers ranging from former Republican presidential candidate Steve Forbes to Democratic New Mexico Gov. Bill Richardson voiced support for business tax cuts at the annual Emerging Issues Forum at N.C. State University.

"To be blunt, your state income tax is too high," said Forbes, a magazine publisher. "You have the highest marginal rate in the Southeast. If you don't address that problem, you are going to retard future economic growth."

The forum, organized each of the last 20 years by former Democratic Gov. Jim Hunt, is this year focusing on an effort to modernize the state's 1930's-era tax system, which economists say North Carolina has outgrown. The forum drew about 800 people Monday.

The forum heard a wide variety of views -- from the desirability of expanding what transactions are covered by the sales tax to the need for the state to provide relief to counties by taking over the funding for Medicaid.

But a theme running through the two-day conference was the need to reduce North Carolina's corporate tax rate and its highest marginal income tax rate. The corporate tax rate is 6.9 percent, the highest in the Southeast. The state income tax rate ranges from 6 percent to 8.25 percent.

North Carolina, overall, ranks 28th in the country in state/local tax burden with lower taxes than such Southern states as Arkansas, West Virginia, Louisiana and Kentucky, according to the Tax Foundation, a nonprofit organization in Washington that monitors tax trends.

Several economists said that North Carolina's tax rates were out of line with neighboring states with which they compete with for jobs.

"If you put together North Carolina's taxes, state and local, they are not high by national standards," said William Fox, director of the Center for Business and Economic Research at the University of Tennessee. "But your tax rates are pretty high."

Richardson, who is being mentioned as a possible presidential candidate, said that cutting taxes has helped fuel New Mexico's economy.

"You are going to hear this from a Democrat," Richardson said. "Cutting taxes is good. Being pro business is good. Putting more money in people's pockets is good."

Paul O'Neill, a former U.S. treasury secretary under President Bush, said corporate income taxes should be abolished at every level because they are not really paid by businesses but are passed on to consumers.

But there was a cautionary note offered by Paul Krugman, a columnist with The New York Times and an economist at Princeton University.

Krugman said recent tax cuts by President Bush have disproportionally helped the wealthy, helping lead to greater inequality between the rich and the middle class.

"We have seen an extraordinary increase in the income concentration at the very top at levels we had not seen since the 1920's," Krugman said.

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