Editorial: Caution well-advised in state tax overhaul

Apr. 10, 2013 @ 10:16 PM

Ripping the engine out of your car while driving down a bumpy road sounds like a terrible idea.

So we’re glad to hear that state House Republicans and Gov. Pat McCrory have throttled back on their ambitions to overhaul the state tax code.

No one seems to disagree that our state tax laws need retooling. But eliminating the state income tax while boosting sales tax, for example, would unfairly shift the burden to people who can ill afford new hikes in their grocery and medical bills.

In an Associated Press report published Monday, we heard from Thom Tills, the House Speaker from Mecklenburg County, taking a more moderate view.

“It has to be done in a methodical, maybe multiyear process so that we do not destabilize what … still continues to be a fragile economy,” he said.

McCrory seems intent on taking less precarious steps, perhaps by starting with a reduction to our corporate and personal income tax rates – currently among the highest in the Southeast – so that we’re more competitive with South Carolina and Virginia when it comes to luring new businesses.

Eventually, we’re going to need to take a long, hard look at the tax code, which was designed for the bygone days of textile empires rather than service and technology industries.

But unemployment, although improved, isn’t where it needs to be.

The real estate market is finally showing signs of life, but it’s far from vigorous.

And with local and state agencies already suffering from fiscal cuts due to federal sequestration, it seems an inopportune time to start making drastic changes to a code that provides at least half the state’s revenue.

We’re making progress down the rough economic road, but we’ve still got some miles ahead before we’ll be ready to pull over and poke around under the hood.

When we do reach that point, though, we’re liable to face the same sorts of problems that arose when Democratic governors and legislators struggled with tax reform.

“The biggest challenge is whether political leaders have the will to adopt tax reform,” tax expert Sabra Faires told the AP. “Past administrations haven’t had that will, despite repeated studies on the need for it.”

Of course, it can be argued that reform sometimes fails because of will, not the lack of it, as people fight to keep their favorite loopholes or forcefully represent special interest groups, trying to make sure that reform – although surely needed – doesn’t hurt them.

Mark Zimmerman of Chapel Hill, a member of the North Carolina Association of Realtors, told the AP: “If we want to have a strong economy, we need to make sure in shifting taxes from one sector to another we don’t shift them to the real estate sector.”

Don’t touch the transmission – mess with the brakes. No! Leave the brakes alone. Worry about the fuel injection. Fuel injection? Nonsense! Clearly, your problem’s in the electrical system.

Let’s keep moving forward, with care.