by Julie Tisdale
City & County Policy Analyst
It’s 2017, and that’s good news for North Carolina taxpayers. North Carolina made important positive changes in 2016, and they’ve continued to take effect this week with the beginning of the new year.
It’s not just the Locke Foundation that’s noticed, either. Forbes lists North Carolina’s tax changes among the best in the nation.
In 2013, North Carolina went from having the highest personal corporate income tax rates in the Southeast to among the lowest, with the passage of tax reform that reduced the top personal income tax rate from 7.75 (with two brackets below that) to a flat 5.75%, and took the corporate tax rate down from 6.75 to 5%. The corporate rate would drop to 3% in 2017 if certain revenue targets were hit (those revenue targets have since been hit and North Carolina’s corporate tax rate will drop from 4% to 3% next year). The state death tax was also eliminated. While there was some broadening of the sales to services, the 2013 tax plan overall represented a net tax cut that has since allowed North Carolinians to keep approximately $5 billion of their hard-earned income that would’ve otherwise gone to state government.
…In 2015, North Carolina legislators passed another income tax cut, taking the rate down to 5.499%. Tar Heel State lawmakers didn’t rest this year either, using 2016 to continue providing income tax relief in the form of a standard deduction increase that provides the greatest relief low income households.(emphasis added)
The Tax Foundation highlighted the same changes. And we at the Locke Foundation have been advocating for these types of changes for a long time. Roy Cordato argued for these and other tax changes in this piece last year, but was even writing about corporate income tax rates way back in 2011, and he’s made similar arguments in numerous blogs and reports in between.
So Happy New Year to North Carolina taxpayers. And here’s hoping that the new legislature keeps up the changes to lower taxes and leave more money in the pockets of taxpayers.