While the Senate has still not released any legislation explaining their tax reform proposal, Grover Norquist was in town on Thursday to promote the same. The House however, was tired of waiting and released their proposed Tax Simplification and Reduction Act in House Bill 998 last Thursday.
The House proposal does the following:
Reduces the individual income tax rate to a flat rate of 5.9.
Itemized deductions are retained for home-mortgage interest and charitable contributions BUT are capped at $12,500 to $25,000, depending on filing status. Taxpayers claiming the standard deduction would no longer be allowed to claim a credit for charitable contributions.
The $100 per-child tax credit increases to $250 for most filers, $125 for the highest wage earners.
Corporate Income Taxes would be reduced to 6.75%.
Business franchise tax rate of $1.50 per $1,000 would be decreased and not expanded to subject limited liability companies to franchise taxes.
The House would preserve film production incentives and other low-income housing and R&D credits.
Sales tax is reduced to a combined sales tax to 6.65 percent. Sales taxes would be expanded to cover warranties and service contracts and installation, repair and maintenance of tangible personal property, including personal automobiles. The sales tax exemption for nonprofit groups and prescription drugs and the exemption on the state’s portion of the sales tax on food all would remain in place.
The House will consider their proposal in the House Finance Committee as early as May 28th.
Source: North Carolina Association of REALTORS® (NCAR)