Lt. Gov. Dan Forest was in western North Carolina Monday. Among the things he mentioned in his speech was the impact of last year’s tax reform and tax reduction plan that was passed by the General Assembly and signed into law by the governor.
“There was more money in your paycheck this January because of what this General Assembly did,” he said. “That is good foundational stuff.”
Forest said North Carolina has moved from 44th in business tax climate to 17th.
“We want to be number one in the business tax climate,” he said. “We want to be the state that is the most open for business.”
So what should legislators do as a next step to keep moving our state toward renewed prosperity and status as first in freedom? JLF’s Roy Cordato offers recommendations. Here’s what he’s written about tax reform for corporations.
On the corporate income side, North Carolina leaders dropped the tax rate from 6.9 percent, highest in the Southeast, to 6 percent in 2014 and 5 percent in 2015. The rate could drop as low as 3 percent in 2017 if the state meets revenue targets.
“Unlike the current corporate income tax, which combines a high rate with special breaks for favored businesses and industries, new lower rates will apply across the board,” Cordato said. “Loopholes and giveaways embedded in the current system, based on what is essentially a crony capitalist model, are eliminated.”
Future reform should focus on abolishing the corporate income tax, Cordato said. “It’s a hidden tax, and it creates a drag on the state’s economy by placing an additional layer of taxation on investment,” he said. “Lawmakers should repeal the legislation that enables the state to tax corporate income at all. This would make it difficult for future legislatures to reinstate the tax.”
