Rucho resigns as chairman on tax flap - WFLA News Channel 8

Rucho resigns as chairman on tax flap

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RALEIGH, N.C. -

A chief architect of a North Carolina tax overhaul plan that's been rejected by other Senate Republicans and the governor said Thursday that he has resigned as co-chairman of the Senate Finance Committee.

Sen. Bob Rucho, R-Mecklenburg, wrote to Senate leader Phil Berger on Thursday to submit his resignation as chairman effective Tuesday afternoon, two hours before the tax-writing panel met to discuss an alternative tax overhaul plan presented by Berger.

"We both agree that real comprehensive tax reform is crucial to the economic future of North Carolina and its citizens, but we have a fundamental disagreement on the most effective model of tax reform and the management of that legislation," Rucho wrote in the letter dated Thursday.

Several weeks ago, Rucho and Berger rolled out to great fanfare a tax reform plan that would have expanded broadly the services subject to the sales tax while lowering income and corporate tax rates. But Gov. Pat McCrory said he preferred other plans — one by House Republicans — that took an incremental approach on lowering tax rates and allowing more services under the sales tax.

Rucho was absent from Tuesday's Finance Committee when Berger offered an alternative that would gradually eliminate corporate taxes without adding any new sales taxes to services. On Wednesday, Rucho said he would oppose the new plan and that true reform in a modern economy extends sales taxes to services.

The full Senate gave tentative approval to Berger's package Thursday, with Rucho one of two Republicans to vote against it. Rucho said in an interview later Thursday that the decision by McCrory and House Republicans to go another route forced Berger to offer a compromise and "basically gutted what comprehensive tax reform is."

Rucho said he resigned the chairmanship because he believed it was inappropriate to remain in leadership while opposing other Senate GOP leaders on such an important issue: "There was too much of a difference in philosophy."

Berger, R-Rockingham, released a one-sentence letter to Rucho: "I hereby respectfully decline to accept your resignation as co-chair of the Senate Finance Committee." Berger's office said he wouldn't comment further.

Rucho said later the response doesn't change his decision to resign. He may it find difficult to detach himself completely from the post. Rules governing the chamber give Berger "the exclusive right and authority" to appoint committee leaders.

Rucho, who already criticized the Republican governor for failing to embrace the original Senate plan, went further in his letter. "It is a huge disappointment that the governor and the Speaker of the House did not provide the leadership or have the political backbone to fight the special-interest groups, who favor loopholes over a fair tax system," he wrote.

The North Carolina Association of Realtors, N.C. Hospital Association and other groups had opposed the Rucho plan.

House Speaker Thom Tillis, R-Mecklenburg, said in a statement that Rucho's criticism "simply appears to be frustration that adequate support could not be generated for this particular tax plan in the Senate."

When McCrory distanced himself formally from Rucho's plan last month, Rucho responded that if the governor "had real business experience, he would not make such a poor policy decision."

The flap between Berger and Rucho, one of his top lieutenants, comes as Republican budget and tax writers are expected next week to begin negotiations in earnest on a final two-year budget and tax overhaul.

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