by Dr. Roy Cordato
Senior Economist, Emeritas
Although it’s just being released, basically as I write this, an agreement on extensive tax reform for North Carolina is looking pretty good, at least if you’re concerned about economic growth and individual liberty. If you’re main goal is growing the state government, you might not like it too much. For all the details see Becki Gray’s post below. From my perspective, here are the three most important highlights.
1. Changing our progressive income tax rate structure, which ranges from a low of 6% to a high of 7.75% to a flat rate of 5.8% in 2014 and 5.75% in 2015. This will put NC with a very competitive rate with it’s neighbors rather than with the highest in the region.
2. The corporate income tax rate will phase down to as low as 5% over a 2 year period and, if revenues remain as predicted, will fall to as low as 3%. This is from the current 6.9%, which is also the highest in the region.
3. The states death tax will be eliminated.
All three of these reforms are economic growth enhancing and represent a good beginning in terms of increasing employment opportunities in the state and creating an atmosphere conducive to entrepreneurship. They do this by significantly reducing the tax penalty on investment productive, income generating activities.