Rob Christensen of the N&O tried to preempt the Tax Foundation’s report with his column on Sunday:
This week the Tax Foundation will release a report that shows that
North Carolina’s tax climate for business is not particularly good.
I guess 40th out of 50 counts as “not particularly good.”
Christensen also rhetorically asks:
But the next time someone says North Carolina has high taxes, you should say, compared to whom: Alabama?
Even though he acknowledged that North Carolina has a higher tax burden than our neighboring states — 10 percent higher than Virginia, a generation after we were roughly equal. Families earning $50,000 in Virginia get to keep $500 more each year thanks to lower state and lower taxes.
But the question of Business Tax Climate goes beyond just the tax burden (what percentage of our money governments take). North Carolina ranks low because the state taxes everything – corporate income, personal income, sales, and property. Our high and steeply progressive personal income tax rates hurt. Our high sales tax rate hurts. Our complicated set of business tax incentives also hurts.
It is not that North Carolina is a “moderately taxed state … in a low-tax nation,” it is that North Carolina’s taxes distort economic activity. Low rates on a broad base make things like the Bill Lee Act irrelevant. Rhode Island (ranked 50th) recognized that and is moving to a flat personal income tax rate.
Spending limits and tax reform are what the state needs to get a lower tax burden and a better business tax climate.
