Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"I think there are both short- and long-run reasons. Depending on how it's structured, it could increase tax revenue now. But I think in the longer run, what it would do is address a major issue with the sales tax. The sales tax as we know it today was really developed in the 1930s. It was applied to what people bought then, which is what we'll call 'hard goods.' We didn't have the service industry as we have it today. But now consumer spending has shifted over time, away from hard goods to services. Those services aren't taxed, so the sales tax is being applied to a smaller and smaller base. That's one reason why we've had to increase the rate. So the idea here is, look, if we want the sales tax to apply to what people buy, we have to include services. So let's eventually expand the sales tax potentially to all services, to everything people spend money on, and then what we can do is actually lower the rate. This will benefit the state because it won't matter if people shift what they spend their money on over time. There are lots and lots of issues here besides the political ones. One issue: would it be revenue neutral? That is, would we have a tax increase or tax decrease on net? Would it promote the purchase of services outside of North Carolina, and what would be the impact on taxpayers at different income levels? So stay tuned."