North Carolina's Republican tax experiment

Via NC Renegade

Tax reform is still all talk, talk, talk in Washington. And many expect real action could take years.

But not in North Carolina. The state has taken a very big first step in overhauling its tax code -- enacting its first major reform in 80 years.

 he change, signed into law last month, creates a modified flat tax system, with a single income tax rate, an increased standard deduction and fewer tax breaks, as well as the elimination of the personal exemption and a $50,000 deduction for small business owners. It also repeals the state's estate tax.

"It's fairly radical in relation to other states," said Kathleen Thies, senior state tax analyst for the tax publisher CCH.

The overhaul has been lauded by Republicans, who dominate the state's legislature. They see the changes as a way to attract more business to North Carolina and create jobs.

The big hope: The new economic activity will compensate for the estimated $2.4 billion revenue loss over the next five years as a result of the reforms.

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