Last week, we told you about North Carolina Governor Beverly Perdue becoming more realistic about the need for tax increases to balance her state's projected $4.5 billion shortfall. Earlier this year the state's Senate Finance Committee released their Tax Modernization and Simplification Plan that includes broadening the state's sales tax base, moving toward an adjusted gross income base for purposes of calculating state income taxes, and lowering the state's income tax rates. (For a complete analysis of the Senate proposal see this informative brief from the North Carolina Budget and Tax Center.)
Now there's more good news. This week the House Finance Committee passed their own proposal which included increasing sales and income taxes, and also broadening the sales tax base to include services. No doubt, North Carolina lawmakers are making difficult decisions about budget priorities, but having tax increases on the table makes their jobs much easier.