The most important numbers in Sunday's story about the taxes in the governor's race: $2 billion to $11 billion.
That is the estimated price tag for Republican Pat McCrory's tax plan. The N&O analyzed tax data, confirmed by state fiscal researchers, to arrive at the estimated cost -- key word being "estimated" because McCrory has released no specifics on exactly how he wants to change the state's tax burden.
For those interested, here's how we arrived at those numbers:
--Personal income tax. At a minimum, McCrory wants to make North Carolina's individual income tax rate (6-7.75 percent) competitive with our neighboring states. He doesn't say how competitive. So for the sake of comparison, we took our neighbors' (Tennessee: 0; South Carolina: 7; Virginia: 5.75; Georgia: 6 percent) rates and calculated the median, 5.875 percent. For calculation purposes, we rounded this to 5.9 percent and we used it as a flat rate because all our neighboring states tax income above $17,000 the same. If you do the math, using estimated taxable income for this fiscal year, the median tax rate decreases North Carolina state revenue by $1.75 billion. At the most, McCrory wants to eliminate the personal income tax, like his model states Florida and Tennessee. This is an easier number to calculate: the individual income taxes amount to about $10 billion, or half the state's budget.
--Corporate income tax. Again, McCrory proposes to make our 6.9 percent rate competitive with neighboring states. The median rate among those states (Tennessee: 6.5; South Carolina: 5; Virginia: 6, Georgia: 6 percent) is 6 percent, which would cut state revenue by $145 million. The cost to eliminate the tax entirely is $856 million.
--Estate tax. McCrory proposes eliminating it. In the past three years, the collections were $71.9 million, $23.9 million and $58.1 million. The average is $51.3 million, so that's the estimated cost to state revenues.
So in the end, the cost of McCrory's tax plan ranges from $1.95 billion to $10.9 billion, or $2 billion to $11 billion.
