There is controversy from the McCrory administration over the recent tax reform proposal by Senate Republicans, yet the proposed changes are a step in the right direction. Taxation on consumption rather than income is more efficient, and it creates the right incentives to earn and to locate a business in the state, but McCrory’s top budget officer has concerns.
Reforms are sometimes difficult, but eliminating the income tax would go a long way toward stimulating the North Carolina economy.
Harvard Economist Greg Mankiw points out that President Obama has again chosen politics over economics in his deal with the house Republicans to avoid the fiscal cliff. Obama appointed the bipartisan Bowles-Simpson commission to examine the necessary fiscal reforms to move the U.S. economy forward. The primary recommendations presented by the commission were almost entirely rejected by the President.
Instead of reforming entitlement programs and avoiding tax increases, the legislation passed by the house ignores both the current $16 trillion debt and the increasing annual deficits due to massive entitlement programs. Marginal tax rates are set to increase on those earning more than $400,000 which will have an impact on many small businesses who create a large portion of the jobs in this country.
So, once again there is little evidence that the President is seeking to advance lasting reform. Political pandering is more important than securing America’s economic future.