The Daily Reflector Gets It

March 27, 2015

The Daily Reflector in Greenville isn’t  in the habit of praising Republicans and we aren’t in the habit of praising the media. But read what they are writing about the tax policy conservative reformers are pushing to help the North Carolina beyond the Charlotte and Raleigh outer loops.

Editorial: Sales-tax idea promising

Greenville Daily Reflector – Thursday, March 26, 2015

Planned legislation that would change the formula for the distribution of sales tax revenue could mark the start of long-overdue reform for the state’s antiquated tax code while gaining political points for Republican lawmakers.

As reported by The Daily Reflector this week, Sen. Harry Brown, R-Onslow, plans to introduce legislation that would implement a per-capita sales tax distribution formula. Changing from a formula more heavily based on the origin of sale to the per-capita model — which would be phased in over a three-year period — would mean fewer sales tax dollars for wealthier, heavily populated counties and more dollars for rural counties.

Pitt County would receive a 20 percent increase in sales tax revenue under the new formula. At today’s rates, the county would realize a nearly $5 million annual increase in revenue.

Whether this proposal will be approved remains to be seen, but the fact that it’s coming from the Republican leadership is being met with cautious optimism in the state’s more liberal political circles.

When Republicans gained a legislative majority and Gov. Pat McCrory was elected governor, many voters wanted to see changes to the state’s tax code. Since that time, the GOP leadership has been sharply criticized for making changes that mostly give massive tax breaks to benefit the wealthy and North Carolina’s corporate citizens.

While the benefits of such tax breaks to the economy often are difficult to quantify, last year’s announcement of nearly 500 new jobs coming to Pitt County — with the expansion of pharmaceutical manufacturer Patheon — certainly could qualify. McCrory came to Greenville to announce the expansion and claimed it as proof positive “that we are on the right track in building North Carolina’s economy.”

Hopefully, the governor will endorse Brown’s sales-tax reform with equal enthusiasm. The per-capita distribution formula would help to bridge the revenue gap that leaves so many communities in eastern North Carolina at a terrible disadvantage when it comes to funding infrastructure needs, public schools and attracting industry.

Brown points to the low sales tax stream for rural counties as a source of higher property taxes that contribute to a cycle of stagnant job growth.

“This is a big reason we have two North Carolinas,” Brown said, “one that is booming and one that is busting.”

Details will emerge regarding how Brown’s proposal would actually work and how communities’ competing interests might divide the added revenue. The idea appears to hold promise, however, for striking a balance between job-creating tax breaks for the wealthy and helping poor communities receive more benefit from those efforts that prove successful in building the state’s economy.