What an exciting time to be alive and living in North Carolina!
The bulk of my column today is going to be about the sweeping tax reform package recently signed into law by Gov. Pat McCrory, but first I want to briefly comment on the move to go after the estimated 42 trillion cubic feet of natural gas in North Carolina.
I recently suggested to N.C. Sen. Louis Pate and N.C. Rep. John Bell that we wouldn’t mind if some of that effort could be made right here in Lenoir County. An article in the Houston Chronicle revealed how once-impoverished Karnes County in Texas had been turned into a literal gold mine, with landowners there pulling in $70 million in royalties in one month alone. We could certainly use some of that enrichment here.
Anyway, the extraction of shale gas is going to get underway in our state very soon, and for that we can be thankful.
Now, let’s talk about tax reform. Patrick Gleason, an analyst who studies tax reform proposals across the country, commented about the reduction in the marginal income tax rate from 7.75 percent down to 5.75 percent by 2015.
He said, “North Carolina, with a 25 percent reduction in the top rate, pretty much blows the other states away.”
He and Elizabeth Malm, an economist with the nonpartisan Tax Foundation, said North Carolina ranks at the top of the nation in magnitude of tax reforms this year. Malm said these changes will make our tax code friendlier for business, jumping North Carolina from 44th to 17th in the Tax Foundation’s State Business Tax Climate Index.
On a personal note, Emma and I were very pleased that our daughter Jessica, who is an associate with the Atlanta-based Natural Stone Services, recently traveled to Charlotte to look into the possibility of her firm expanding its operations into North Carolina. This could happen, since she was very impressed with the business-friendly atmosphere she found here.
Malm added this tax reform amounts to approximately $700 million in tax cuts and that Kansas, which approved a tax reform package last year, is the only other state to even come close to that. The Climate Index takes into account personal and corporate income taxes, along with sales, unemployment insurance, and property taxes.
Here are the highlights of this tax reform legislation:
1. Increases the standard deduction to $15,000 for married taxpayers filing jointly, $12,000 for heads of household, and $7,500 for single taxpayers and married taxpayers filing separately
2. Unlimited itemized deductions for charitable contributions will be allowed
3. The corporate income tax rate will decrease from the current 6.9 percent to 6 percent in 2014 and 5 percent in 2015. This rate will decrease even further by 1 percentage point in each of the two succeeding years if certain tax collection figures are met
4. Protects all Social Security income from state taxes
5. Preserves the sales tax refund for nonprofit organizations
6. Caps the state gasoline tax at 37.5 cents per gallon for two years, and
7. Eliminates North Carolina’s death tax
Patrick Gleason summed it up this way, “Small businesses and large companies across North Carolina are going to see a significant increase in their job-creating capacity, because this is a big step in the right direction.”
May it indeed be so!
Reece Gardner is the host of “The Reece Gardner Hour,” which airs on TACC-9 on Mondays at 9 p.m., Tuesdays at 8 p.m., Thursdays at 11 p.m., Sundays at 10:30 p.m. and on-demand anytime at TACC9.com. You can reach Reece at rbgej@aol.com.
Legendary TACC-9 personality Reece Gardner writes a bi-weekly column for The Free Press. It publishes every other Wednesday; the guest column will appear here on the other Wednesdays. To write a guest column, please contact Editor Bryan Hanks at 252-559-1074 or at Bryan.Hanks@Kinston.com.Reec