TAX WHAT YOU DON'T WANT...:

Louisiana Governor Bobby Jindal, Nebraska Governor Dave Heineman, and Kansas Governor Sam Brownback have all called for their states to eliminate their income tax and replace it with a sales tax over the past week. They were joined yesterday morning by North Carolina, where the Senate President Pro Tempore, Phil Berger, confirmed the legislature and the Governor, Pat McCrory, would pursue serious tax reform this session. Indeed, a senate proposal being crafted into legislation includes a repeal of North Carolina's personal and corporate income taxes along with an expanded sales tax. [...]

The Civitas report evaluates the economic benefits from eliminating the personal income tax, the corporate income tax, and the franchise tax, all of which penalize businesses and hinder job creation. In place of the old taxes, the reform calls for a new consumption-based tax system, largely via expanding and slightly increasing the state sales tax.

The findings of this study show the proposal is a recipe for economic growth and more jobs. The Civitas study shows that such consumption-based tax reform can increase North Carolina's average annual rate of personal income growth by 0.38 percent to 0.66 percent. It also shows that states without a personal income tax have average annual growth rates 0.5 percent higher than other states, while states without corporate income taxes average a full percentage point higher each year.

But what do those figures really mean? If a consumption-based tax reform like this had been passed in 2000, North Carolina would be an entirely different place. In dollar terms, total personal income would have been between $14.4 billion and $25.0 billion higher, a 4 to 7 percent increase over the state's actual 2011 total personal income. This is an additional $1,500 to $2,600 in income per worker.

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