The state House is considering an incentive to lure Apple.

The change in the state's corporate tax laws is designed to make North Carolina more attractive to a planned $1 billion Apple data center.

The House will vote Tuesday on the bill, which was recently changed to push the project to counties with a high unemployment rate. It passed the Senate ealrier this month.

The bill would change the way corporate income taxes are calculated by giving breaks to companies with a relatively small share of U.S. sales in North Carolina but which have large shares of their nationwide property and payroll here.

The breaks could be worth about $46 million over the next 10 years. (AP) 

Senate Democrats have their tax plan ready.

According to a document received by the Associated Press, the Senate Finance Committee will consider a proposal today that would reduce the sales tax rate but expand the services it covers, repeal the food tax and raise sin taxes.

The plan would raise $600 million a year, more than the $500 million in revenue missing from the Senate budget passed earlier this month.

Under the plan:

* The sales tax rate in most counties would drop from 6.75 percent to 6 percent.

* The sales tax would be expanded to cover moving services, building repairs and downloaded music.

* Corporate and individual income tax rates would go down.

* The 2 percent tax on food at grocery stores and other retailers would be repealed.

* The cigarette tax would be increased 15 cents per pack.

* The alcohol excise tax would be increased.

The House is also expected to put together its own proposals for modernizing the tax code.

North Carolina could fall short of projected revenue by 10 percent.

According to a presentation on the budget outlook prepared by the legislature's Fiscal Research Division, the state could fall short of its expecations by approximately $2 billion.

Through December, tax collections were down 6.6 percent.

Particularly hard hit by the recession are three taxes that make up 86 percent of general fund revenues: the personal income tax, the sales and use tax and the corporate income tax. All three are directly tied to the economy.

But state budget officers won't know exactly how bad the recession has hurt tax collections until after April 15, when corporate and personal income taxes are paid for the year.

The presentation says it is "highly probable" that the state's tax collections won't return to the projected amounts until the 2010-11 budget year.

State revenue officials want to change the way businesses file taxes in an effort to raise more money and cut down on cheating.

Greg Radford, director of the Corporate, Excise and Insurance Tax Division of the state Department of Revenue, told a legislative committee Monday that large corporations with the means and know-how to create subsidiaries can often have an easy time lowering their tax burden in North Carolina.

The state's current tax law makes it tougher for the state to tax subsidiaries or related companies as a single business enterprise. Currently, the Revenue Department can require a business to file a tax return for all of its related companies if officials determine that the company is hiding its true profit.

But the current law is unclear and has led to lawsuits between the state and large corporations over how that authority is applied. Well-intentioned businesses are often in the dark about how the revenue department react to tax filings, said Bill Nelson, a corporate tax lawyer who spoke to the legislative committee Monday

Nelson said the revenue department now has the power to force business to file tax returns whichever way would generate more money for the state. And the state's decisions are difficult to appeal.

Changing the law to require a company to file one return on behalf of all of its subsidiaries could generate more money for the state, although it is difficult to estimate how much, experts told the committee Monday.

Rep. Paul Luebke, a Durham Democrat and chairman of the committee, said a bill that would clarify the state's business tax law may appear in the 2009 session. The change could help avoid complex lawsuits and generate enough new money that the state could lower the business tax rate from 6.9 percent to 6 percent. 

"That would be good for small business," Luebke said.

Beverly Perdue says Richard Moore's plan to end the state's corporate income tax would hurt schools.

In a press release this afternoon, the lieutenant governor's campaign pointed out that the state treasurer endorsed ending the corporate income tax in a Jan. 2 interview with News 14:

"Well, I've been advocating for several years now that we look at doing away with it, phasing it out."

Perdue's campaign pointed out today that 6.45 percent of the corporate income tax pays for school construction.

It estimates ending the tax would mean a loss of $1.5 billion in general funds and $100 million for new school buildings.

"North Carolina voters just can't trust Richard Moore on education," said Perdue spokesman David Kochman in a statement. "His tax scheme would create a $1.5 billion hole in the state budget and devastate school construction."