We won't know Tax Reform's Impact until 2016

by Gene Arnold, former legislator and NC SPIN panelist, July 16, 2016.

One of the most contentious sessions of the General Assembly can now end within the next two weeks with the passage of a tax bill.  Some will continue to hold their breath until the Senate gets the legislation and passes it without any further changes to upset the agreement by the House and Governor.  Such is the public's lack of trust in the Senate.

The Senate, House and Governor agreed on the least they could each accept.  Sen. Ruccho is correct, it's just the beginning.  To have worked so hard on the original bill and have it dropped now shows him as the true winner in the tax debate.

It's not a tax reform, but a tax cut.  As in all tax bills the devil is in the detail.  Everyone likes the reduction in the rates.  No one likes the limits in the deductions on housing or the added taxes on services.  The results will not be truly felt until 2015.  That's when each person can learn what the individual impact on them will be.

In the next two years the expected $500 million budget shortage can easily be addressed.  Starting in 2016 the real impact will be known.  Whether or not economic development will be increased because North Carolina has a lower tax rate than surrounding states remains to be seen.  If it does the public will be most pleased.  If not, and incentives continue to be necessary to lure companies to our state, there will be negative repercussions from the public opinion polls conducted by democrats.

Everyone wants the legislature to adjourn and go home.  Now they can.  No one likes the in your face attitude of the legislators.  However, very quickly after they leave Raleigh the public will forget the session, start watching football, and celebrate the holidays.  And then our life cycle repeats itself.