by Brian Balfour
Senior Vice President of Research, John Locke Foundation
Conservative legislators in North Carolina have notably improved our state’s tax code over the past dozen years. Significant tax cuts and reforms have enabled NC to outcompete most other states economically and make it far more attractive for job creation and investment.
There is of course still room for improvement, including indexing the standard deduction to inflation, ending the privilege license tax, and eliminating corporate welfare.
But how does North Carolina treat people working remotely?
A study released today by the National Taxpayer’s Union Foundation addresses that topic. This is an issue of growing concern, given the fact that the number of people working remotely tripled between 2019 and 2021.
Disappointingly, North Carolina ranked #42, worst among neighboring states. According to the study, “the Tar Heel State’s protections for remote and mobile workers are virtually nonexistent.”
More specifically, NC could offer workers living in other states but working for a North Carolina employer relief by increasing both the threshold for the amount of time working in the state before one must file an NC state tax return, as well as the threshold before employers must withhold income taxes on the employee’s behalf. North Carolina could also enter into reciprocity agreements with neighboring states to ensure that people living in a neighboring state but working in North Carolina only pay income taxes to the neighboring state, and vice versa.
Remote work has exploded in the last few years, and is likely to continue as a significant share of the workforce into the future. North Carolina legislators have an opportunity to continue with their successful tax reforms by extending more protections to remote workers.