RALEIGH, N.C. -- Both houses of the North Carolina General Assembly passed House Bill 998 Tuesday. The bill is also known as the Tax Simplification and Reduction Act, and it's the result of a compromise by the House, Senate, and Governor Pat McCrory.
In a press release, Senator Phil Berger said, "Today's historic vote follows months of hard work and fulfills our most important promise to voters: enacting significant tax reform that makes us competitive for 21st century jobs and returns more money to North Carolina families."
The bill would eliminate North Carolina's three-tiered income tax code. Instead, every tax payer would pay a 5.8% income tax.
The bill would also lower corporate income taxes while adding new sales taxes on electricity and natural gas as well as movies and live performances, like concerts.
The Tax Simplification and Reduction Act kills a tax break for small businesses, eliminates the estate tax and exempts social security income from state income tax.
Democratic politicians believe the bill is a major tax cut for the wealthy and for businesses that will end up costing the working class and lower-middle class more money.
Self-proclaimed progressive economist David Ribar, a professor at UNC-Greensboro, agrees with that assessment.
"Instead of households with incomes above a hundred thousand dollars paying a higher tax rate they'll pay what everybody else pays. That means a pretty big income tax cut for them," Ribar said.
The main reason for this tax reform is to lure businesses to North Carolina.
"As other states struggle to accomplish tax reform, North Carolina has proven we are seriously committed to making our state the best place in the country to start a business, grow a business and raise a family," Berger's release said.
"We had a big tax cut a couple of years ago. What's happened to jobs side then? Nothing," Ribar said. "We'll probably get a big steaming plate of nothing again from this."
The bill requires another vote by House and Senate tomorrow, and it could be on Governor McCrory's desk by the end of the week.
He is expected to sign it.