Rucho resigns as chairman on tax flap

Jun. 13, 2013 @ 12:00 PM

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 and obtained by The Associated Press.

Several weeks ago, Rucho and Berger rolled out to great fanfare a tax reform plan that would have expanded 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 Senate prepared later Thursday to debate the new Senate plan and hold the first of two required votes.

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."

Berger's office didn't immediately respond Thursday morning to Rucho's resignation — his spokeswoman said she hadn't seen the letter.

The flap between Berger and 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.