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Weekend stories: taxes and scholarships

From this weekend's papers:

RALEIGH — When lawmakers finish their annual session this week, they will be taking home a big piece of homework: tax reform.

North Carolina’s tax code hasn’t undergone a comprehensive rewrite in decades and no longer fits with the state’s rapidly changing economy. As a result, mercurial swings in the tax revenue make for cycles of flush times followed by difficult-to-bridge deficits.

Gov. Bev Perdue signed a $19 billion budget into law Friday that includes both budget cuts and $1 billion in new taxes, including a temporary 1 cent increase in the sales tax and surcharges on high-income earners.

“Even if we had an up-to-date tax code, we would have had a problem this session,” said Ran Coble, who heads the nonpartisan Center for Public Policy research.

States across the nation have struggled to make ends meet amid economic upheaval. But North Carolina’s problems have been exacerbated by the aged tax code, he said.

If done right, lawmakers and experts say, North Carolina could lower the tax rates — the percent of income for a particular sales transaction paid in taxes — and still collect the same amount of money. In trade, more items would have to be taxed.

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Also...

RALEIGH — A scholarship program designed to allow low-income students to graduate from college debt-free will be phased out as part of the cuts made in this year’s budget.

Gov. Bev Perdue Friday signed the $19 billion budget lawmakers approved earlier this week.

The measure raises $1 billion in new taxes and cuts programs throughout the budget to deal with what House and Senate leaders described as a $4.5 billion shortfall.

The $16.2 million EARN Scholarship program was among those cuts.

Created in 2007, the scholarships pay up to $4,000 per year to students whose families are at 200 percent of the poverty level or below.

“They’re hitting the neediest students,” said Deborah Tollefson, director of financial aid at UNCG.

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