State Tax Reform Essay Example | Topics and Well Written Essays - 1250 words - 17

State Tax Reform - Essay Example Investments in education and infrastructure have escalated. In response to the continuously weak economic performance of North Carolina, a significant change to the tax system has been proposed. According to research conducted by Civitas Institute, chaired by Arthur Laffer, it is claimed that a reduction of tax rates for the wealthy and the elimination of corporate tax will revive North Carolina’s economic performance and induce the creation of numerous job opportunities (Johnson, 2013). The Civitas/Laffer proposal would profoundly change North Carolinas tax framework by abolishing the personal income tax, franchise tax and corporate tax, which in aggregate generate 65 percent of the states income, and to a great extent supplanting this income with a higher sales tax that would apply to more products and services. In particular, the proposal would: first, abolish the personal income tax. Second, abolish the tax on corporate income (Johnson, 2013). Third, abolish the tax imposed on franchise business. Franchise businesses are businesses that benefit from already established brands and models by another organization. In California, the franchise tax is proposed to apply only to those franchise businesses incorporated within the State. The franchise tax is significant to the government since it is a source of revenue. The tax generates $ 650 million, thus the source of its significance. However, it is not as important as a corporate tax since the latter generates more revenue to the State government – $ 1.1 billion. Personal tax is the most important since it generates the highest amount of revenue to the government - $ 10.3 billion based on the fiscal period 2011-2012 (Johnson, 2013). Â