WRAL on Tax Package

NC Democrats still aren’t on same tax page

By GARY D. ROBERTSON

Associated Press Writer

Posted: Tuesday, Jul. 28, 2009

RALEIGH, N.C. Democratic leaders at the General Assembly still weren’t on the same page on taxes Monday night as lawmakers tried to regroup after Gov. Beverly Perdue balked on their revenue deal.

House Democrats want to get back to the bargaining table on taxes with Senate Democrats as soon as possible by modifying a $982 million tax package hammered out with the Senate last week, rather than start from scratch.

Perdue rattled fellow Democrats when she announced last Thursday she wouldn’t accept the plan because it contained a 2 percent income tax surcharge paid on all wage earners with tax bills, not just the wealthiest.

House Speaker Joe Hackney, D-Orange, said his chamber’s preferred option is “try to see if we can resurrect that (plan) in some way.”

Working out a tax plan nearly all Democrats and Perdue can support is a key element in passing a permanent two-year state government budget that’s already four weeks late.

“We’re going to present the Senate with a new proposal and try to be flexible and try to figure out something so we can get this thing finished up,” Hackney told reporters.

But Senate leaders seemed content with going their own way – for now – by seeking to revive their own plan to overhaul the tax system that would expand dramatically the number of services subject to the sales tax, while reducing tax rates overall.

A bipartisan coalition of business and former government leaders have pushed the idea for years as a way to tap into a tax base that has shifted from manufacturing to services.

The Senate Finance Committee will meet Tuesday to talk about “why we really need to fix the tax system rather than raise just a lot of taxes,” said Sen. Dan Clodfelter, D-Mecklenburg, one of the architects of the overhaul plan.

Hackney said it’s too late in the legislative session to work on such a dramatic change to the tax system, but Clodfelter said it was the House that had delayed discussions.

“We’ve been waiting for the House folks to sort of pick up the challenge with us,” he said. “If it’s late, it’s because we’ve been waiting on them.”

The $982 million package agreed to by legislative Democrats, who have the majority in both chambers, also contained a one-cent increase in the sales tax and higher taxes for cigarettes and alcohol.

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