With the N.C. General Assembly beginning its 2013 legislative session at the end of this month, the Republican majority is discussing big changes to the unemployment system, and sweeping reforms of the state’s immigration policies and tax structure.
In an interview with the Jefferson Post Wednesday, Representative Jonathan Jordan of the 93rd District (Ashe, Watauga) discussed some of proposed changes Republicans will be pushing for when the GA convenes on Jan. 30.
Republicans in the GA want to move to a consumption-based tax system. “We are looking at eliminating or lowering income and corporate taxes,” Jordan said.
“We need a tax structure that improves growth, is (revenue neutral), has a broader base, is more stable and is simple and transparent,” he said. “We are trying to fix a system that has been…dragging us down for a long time.”
Income taxes fluctuate with the economy, and N.C.’s corporate tax code was written when manufacturing was 50 percent of the state’s economy, not the 20-30 percent of today, he said.
Both corporate and income taxes are, in effect, “taxes on productivity,” and some types of businesses pay higher rates than other in a system that “picks winners and losers, ” he said.
A flat tax on all consumption is being considered. “It would be no higher than 8 percent, including state and local taxes,” Jordan said, versus the current 6.75 percent tax in Ashe.
The tax would be revenue neutral, replacing but not exceeding the $19 billion in revenue generated by the current system, he said.
One potential downside would be a one percent excise tax on property, which would be five times more than the current tax of is $2 per $1,000, he said.
Asked if implementing a consumption tax would hurt low-income families who pay little or no income tax, but already pay sales, gasoline and other consumption taxes, Jordan said a “prebate” had been discussed which might offer some form of consumption tax credit.
Citing the concerns of influential pro-immigration-reform groups like NCFIRE, NC LISTEN and the Tea Party, Jordan said immigration reform would be on the agenda. But the needs of tree farmers and agriculture in general must factor in, he said.
“You can ask the farmers, they can’t get anybody else to do (this work),” he said.
At issue is the desire for a system of accounting for immigrants without creating a registry. “Federal Courts will shut us down if we set up a registry,” Jordan said.
Framing some of the questions in this debate, Jordan asked, “should we have some sort of state guest program? Do we want to know who they are? Do we want them to pay taxes, buy car insurance? All of these questions are bubbling to the surface,” he said.
Documented or illegal, immigrant workers create issues for law enforcement and the courts. Police need to know who they’re dealing with during traffics stops, and the courts have to process citations for unlicensed, uninsured immigrant drivers, he said.
“Law enforcement needs identification, taxes need to be paid,” Jordan said. “The (federal government) have not stepped up…we have to do something.”
House Revenue Laws Committee recommendations drafted in December will be taken up by the Finance Committee on Jan. 31. “We will debate it very quickly, and get it to the governor by mid-February,” said Jordan, a member of the Finance Committee.
North Carolina owes the federal government $2.4 billion in jobless benefits paid since the onset of the recession. State Unemployment Tax Assessment (SUTA) rates for employers were too low to offset demand for jobless benefits, he said.
Jordan and House Republicans want to implement a three-point solution: reducing maximum weekly benefits and coverage periods, a temporary increase on SUTA rates, and a 20 percent surcharge on SUTA liabilities until the $2.4 billion can be paid down, which Jordan says will be by 2016 given these measures pass.
North Carolina currently pays a maximum weekly benefit of $525, the highest in the southeast. “If we cut it to $350, we’re still higher than other states,” said Jordan.
The lowering of maximum benefit would only affect those drawing top-of-scale benefits — about 16 percent. “Also, those cuts would not affect anybody currently drawing unemployment,” he said.
The temporary increase in SUTA taxes would create minimum rate of 0.06 percent. This would affect employers who currently pay no unemployment taxes due to high employee retention rates, he said.
Asked what stimulative strategies were being considered to boost employment, Jordan said that the first $50,000 of active business income — not including capital gains — could be made tax-free to help small businesses and start-ups.
“That would be a tax credit of $2,500-3,000,” he said.
Asked how the GA would negotiate around the U.S. Department of Labor’s “non-reduction” rule, which threatens to cut off some 47 weeks of extended unemployment benefits if states reduce their benefits, Jordan said: “We can’t change our system for six months…this is the first things we will be discussing when we go into committee. We have to do something.”
School calendar waiver
Jordan wants to push for a school calendar “weather waiver,” giving flexibility to local school districts who may wish to start school earlier than Aug. 19 to accommodate for snow days, which often push the last day of school into June, he said.
“Ashe and Wautuga have been first or second in school days missed for ten years running,” he said.
Opponents of a flexible calendar include summer camps and summer employers of high-schoolers, he said.
Senate Bill 795, containing provisions for an adjustable calendar, passed the Senate and was sent to the House Education Committee — of which Jordan is a member — at the end of last session.
Write your congressman
“We are not going to do anything that will hurt our constituents or the economy,” said Jordan. “My constituents need to contact me if they have concerns.”
Contact Representative Jonathan Jordan at firstname.lastname@example.org or call (919)733-7727