I would like to start by addressing Elaine?s question toward the end of her statement. ?What is the fair share of tax revenues that should be paid by corporations?? In light of the fact that corporations do not and cannot pay taxes, this is a meaningless question. The question that is actually being asked is how much of the tax burden should be borne by workers, consumers, and shareholders in the form hidden taxation imposed by the corporate income tax? My answer is that these groups are already paying too much in taxes and they shouldn?t be deceived into thinking that they can pass some of that burden onto someone else vis a vis the corporate income tax.

As far as the studies that Elaine cites, it is difficult for me to investigate them in this setting, (the studies themselves are not apparent on the links). The point that needs to be made is that these studies, unlike the one often cited by the Governor conducted by Ernst and Young, would need to include all taxes paid by business. Most importantly they would have to include all personal income taxes paid by independent unincorporated businesses and they would need to allocate a portion of the sales tax to business. The Earnst and Young study that shows NC as having the 5th most favorable tax burden is irreparably flawed because it does none of this. NC?s personal income tax has one of the highest top marginal rates in the country and the vast majority of businesses in the state are unincorporated and their owners pay their business tax at the top 8.25 percent rate. Also, The simplest excise tax analysis learned in every econ 101 class can demonstrate that sales taxes are borne by both the seller and the buyer. So part of the sales tax should be included in the business tax burden.

Finally, so long as we are citing studies, reports done by the Tax Foundation and the Small Business Survival Committee cast North Carolina as having a relatively poor tax climate for business. The Tax Foundation ranks states according to their ?business tax climate? and they include retail sales and personal income taxes. They ranked NC as among the worst in the region and right at the average for the nation for 2003. The SBSC looked at fiscal policies effecting entrepreneurs and small business, focusing on marginal tax rates and capital gains. NC had the 15th least congenial business atmosphere in the country.