North Carolina has a lot to brag about when it comes to its tax climate. Over the past dozen years, state legislators have transformed it from one of the least competitive states to one of the most competitive. It is recognized by national outlets as the best state to do business.

But now is not the time to rest on our laurels. There’s still more room for improvement. Other states have followed North Carolina’s lead and are catching up.

Repealing the onerous and destructive franchise tax would be a great next step.

NC Chamber leadership described the tax as “a major impediment to new investments” and urged its immediate repeal, calling it in 2021 an even higher priority than lowering the corporate income tax. The complexity of the franchise tax not only places steep compliance costs on businesses, even those with no physical presence in the state, but also is used by the state Department of Revenue as a source for punishing honest mistakes and oversights with fines.

Making matters worse, businesses must pay the tax every year, even in those in which they lose money, punishing job creators when they can least afford it. Even independent contractors — depending on how they file — must pay an annual minimum despite having no employees or assets.

In spite of all of these disruptive effects, the franchise tax generates just a small fraction of state revenue. Numerous states over the past several years have recognized the harmful impact of a franchise tax and have repealed theirs, leaving North Carolina in a minority of states still imposing one.

The reasons for eliminating the franchise tax are numerous, and repeal would continue our state’s positive momentum and make North Carolina more competitive for investment vital to economic growth and the jobs that come with it.