RALEIGH – When Republicans came into power on Jones Street at the beginning of the decade North Carolina was near the bottom in tax competitiveness nationally. The State was in billions of dollars of debt, the budget was a mess, and taxes were the highest in the Southeast.
Fast forward through seven years of Republican tax and economic reforms and the Old North State is has flipped the script and now ranks near the top in terms of business tax climate according to the nonpartisan Tax Foundation.
Last week the Tax Foundation ranked North Carolina’s tax climate the 11th best for business in 2018. North Carolina recently climbed the key rankings from 41st – passing 30 states in 3 years!
In fact, in 2015 Republican-led tax reforms catapulted North Carolina up the list faster than any other state in the history of the rankings.
This year’s report from the Tax Foundation lauded the impressive improvements:
“After the most dramatic improvement in the Index’s history in 2015—from 41st to 12th in one year—North Carolina has continued to improve its tax structure, and now imposes the lowest-rate corporate income tax in the country.”
Since 2011 the General Assembly has reduced the sales tax, income tax and corporate tax rate imposed on North Carolina families and businesses.
North Carolina Republicans also tripled the zero-tax bracket for families paying personal income taxes, ensuring an estimated 1.5 million working people will owe no state income tax by 2019.
Tax relief passed by the 2017 N.C. General Assembly was not included in the latest Tax Foundation rankings but “will be reflected in the next edition of the Index.”
Originally, the 2017 tax relief packages were even more aggressive, but they got watered down in the House. Perhaps leadership was saving dry powder for the 2018 election season, but all of our wallets would have rather had the extra dollars in the mean time.
So, what’s keeping North Carolina out of the top ten? Well, most of the top ten ranked states enjoy a complete absence of personal or corporate income taxes, or sales taxes.
Eliminating income taxes was a stated goal of the animating forces that got the tax reform push moving several years ago, such as retired Sen. Bob Rucho (R-Mecklenburg).
Rucho wanted to widen the tax base and rid ourselves of income taxes once and for all. We’ve made significant progress toward that goal, but many leading lawmakers are timid about moving too fast.
Hopefully, 2018 will be the year corporate income taxes get tossed in the dustbin and personal rates move closer to zero.