Road to reform detours into tax cuts.

• Author: Mooneyham, Scott
• Position: CAPITAL GOODS

Despite the attention changes to abortion and election laws brought, the state legislature's Republican majority considers those it made to the tax structure its key accomplishment this year. When the package passed after months of talk and weeks of negotiations, lawmakers called it historic--a boon to all, especially businesses. "It helps those that are here now," said Rep. David Lewis, the Dunn Republican who was an architect of the plan. "It helps attract others that might come in and create more jobs."

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Like the aforementioned abortion- and election-law changes, the tax overhaul attracted media attention outside the state, though its coverage didn't skew as negative. The CNN Money website noted that, while Washington dithered on national tax reform, Raleigh took action. In the Wall Street Journal, economist Stephen Moore echoed Lewis, saying the cuts will "spur growth and job creation." (Some liberal national pundits disagreed, calling them a shell game to benefit the wealthy.)

None of those pundits live in North Carolina. They'll neither enjoy nor suffer the consequences of the changes. Those on the outside looking in rarely delved into the details of the tax law or the nitty-gritty of the process that led to its passage. Doing that, you discover that the end product does not resemble what those beating the drum for tax reform described. The result was a tax cut for many that could turn into a tax increase for a few.

Sen. Bob Rucho lived and breathed tax reform all year. What passed, though not perfect, is better than what the state had, he says. The Matthews Republican, who co-chairs the Senate Finance Committee, traveled a strange route to reach that conclusion, one worth retracing to understand where the state's tax structure wound up compared with where it was supposed to go. In November and December, he criss-crossed the state with his stacks of papers and PowerPoint presentations, trying to sell tax reform to business and policy groups. "The existing system isn't going to work now or in the future," he told them. His ideas were bold. He didn't want just to lower taxes on personal and corporate income. He wanted to do away with them, along with dozens of tax breaks, loopholes and carve-outs for various industries and constituencies. To replace revenue, he proposed extending sales taxes to cover virtually all services not involving business-to-business transactions. That was needed to keep tax reform "revenue...