by Paige Terryberry
Fiscal Policy Analyst, John Locke Foundation
Are you on the edge of your seat waiting for the North Carolina budget? Likely not. According to the October Civitas Poll, 49.6% of North Carolinians do not believe their life has been impacted by the lack of a new state budget. Another 22.2% are unsure if their life has been affected.
Though I agree that governmental debates should be far from the forefront of our minds, one item to anticipate with this year’s budget is particularly important because it will allow you to keep more of your money: tax cuts.
Tax cuts are good for North Carolinians. The Senate and House proposals included an increase in the standard deduction (the portion of your income that is not subject to tax) and cuts to the personal and corporate income tax. The Senate’s plan would bring more savings to workers. Gov. Roy Cooper’s budget recommendations offered no tax cuts.
Cutting the personal income tax would result in bigger paychecks. It would also make North Carolina more competitive regionally. Our neighbor Tennessee, for example, does not tax earned income. The more aggressive Senate proposal advocated to lower the personal income tax to 3.99% after 2025. The current rate is 5.25%.
Corporate income tax cuts would result in lasting economic growth. Claiming, as the Left does, that a corporate tax cut benefits the wealthy ignores the behavior of corporations. Corporate taxes are a tax on workers. They lead to smaller paychecks and a reduction in employment.
North Carolina already has the lowest flat corporate tax rate in the country. Eliminating the tax completely would make us the seventh state to do so. With today’s supply chain crisis and work disincentives, the tax relief would be especially favorable.
North Carolina’s budget is still undergoing debate but could see a vote sometime next week. Tax cuts are something to be excited about.