Moving Forward in Tax Reform

Moving Forward in Tax Reform

Since 2005, IEI has been involved in the Financing the Future program of work.
This program of work was honed through the collaborative effort of its three Working Groups, comprised of members from the business, government, nonprofit, and higher education sectors. The Working Groups began with three separate broad agendas that then merged into one comprehensive task force to consider the most promising set of possibilities. The three subgroups focused on Financial Innovation, Bridging the Financial Gap and Modernizing Local Finances.

Then, at the 2006 Emerging Issues Forum, the Working Groups presented “Options for Consideration” under the following broad areas for change:

State Revenue: Restructure the state’s revenue system in a way that promotes growth with equity.

Local Innovation: Ensure sufficient revenues to meet the future needs of counties, cities and the state.

Best Practices: Develop a transparent budget and management process for both state and local government.

Following the Forum, IEI’s work was pursued in a variety of arenas.  It held five community forums around the state to connect local issues to the big challenges facing state finance, which demonstrated the many ways in which the future of local government finance was tied to choices made in Raleigh.

In partnership with the Z. Smith Reynolds Foundation, IEI also organized a leadership retreat in Asheville for a broad range of business leaders, where the challenges facing the state were spelled out for the first time using the tax calculator developed by IEI.

In 2007 the issue achieved new salience through the work of the General Assembly’s State and Local Fiscal Modernization Study Commission.  IEI helped staff the work of the Commission, and supported its work through the use of the calculator. A version of the tax calculator was also placed on the North Carolina Association of County Commissioner’s website that included property tax rates for all 100 counties.

One of the results of the Study Commission was legislation that eliminated the county share of Medicaid, a pressing burden on local government that had been identified by IEI’s work.

In addition to numerous presentations by IEI staff to civic groups and local government across the state, IEI convened a Business Committee on Financing the Future (BCFTF). The BCFTF met five times, most recently in March 2011, and has heard from numerous nationally recognized experts. The group  is co-chaired by three business leaders, Jack Cecil, John McNairy, and Richard Vinroot, and is comprised of high-level business leaders representing the state’s varied regions and industries. On Monday, April 14, 2009, it released its Statement of Principles on tax modernization, the culmination of four years of work.

These principles were broadly adopted by a tax plan proposed by the Senate Finance Committee of the NC General Assembly, although much was ultimately excluded in the final budget.