The big tax debate begins
With tax legislation passed and signed by the governor here in North Carolina, we won’t hear about competing state tax proposals at least for a while. But this same debate is just beginning in Washington. Will the same kind of issues be debated in the nation as were discussed in our state? N.C. State University economist Mike Walden responds.
“Yes they will, and in many ways, this is going to be a more important debate because what most people pay in federal taxes is much larger than what they pay in state taxes. And I think we’re going to have the same kind of issues discussed.
“We’re going to have a debate about tax rates, how high should they be. How much should they change as people’s taxable income changes? We’ll have a debate just as we did in North Carolina about corporate income taxes.
“There’s the concern at the national level that maybe our national corporate income tax rates are high relative to other countries, so we will have a debate about that, I suspect. We’re going to have a debate about deductions. We have that again in North Carolina, whether we should continue to have deductions and the same level of deductions for things like the home mortgage interest deduction, maybe charitable deductions, maybe many kinds of business deductions.
“Now one issue we will not hear about probably at the federal level is the sales tax, because we don’t have a federal sales tax. It may, however, come up. I would not be surprised if it doesn’t happen. We may have it come up in the guise of something called a value-added tax. If anyone hears about a value-added tax being proposed at the federal level, that’s really a national sales tax.”Category: Economic Perspective