Republicans must make their tax-reform plan work

Editorial, Winston-Salem Journal, July 18, 2013.

With the announcement that they have agreed on a new tax-reform package, Republican legislative leaders and Gov. Pat McCrory have disproved one Democratic contention.

With that accomplished, they must now prove their own.

Democrats had been saying recently that the state’s three-sided Republican leadership was too divided to agree on a tax-reform package like that announced Monday.

Now that Republicans have their tax plan, however, the burden shifts to them to prove that it will, as they promise, “unleash” the state’s economy and create tens of thousands of new jobs.

Two years ago, at the end of the first legislative session in which Republicans controlled both houses, several brash GOP legislators predicted immediate economic recovery after they drastically cut the state budget and lowered taxes. The economic spurt didn’t hap-pen.

In a bit of an overstatement Monday, McCrory called the tax deal “the most comprehensive tax-reform package in North Carolina history.” The tax reforms of the 1930s dwarf this package. But the governor’s hyperbole should not diminish the fact that Republicans moved the state’s tax structure toward the GOP’s stated goals on almost all fronts.

There are lower corporate and personal income-tax rates, a flat personal income-tax rate, a broader sales-tax base on some services and a higher standard deduction. The estate tax is eliminated, as are some tax loopholes. In short, by about this time next year, when most of the tax provisions are well on their way to being fully implemented, the state’s tax structure will reflect this political leadership’s positions on economic development.

The budget will also reflect conservative Republican orthodoxy. It is much smaller, when adjusted for inflation and population growth, than it was when the recession hit in 2007, and it spends much less on public education and social services.

North Carolina no longer operates on the 1930s tax structure or a Democratic budget. Republicans own our economy now. We’ll just have to see if they deliver on what they’ve promised.