Running the numbers: Corporate taxes

Posted February 14, 2011

In her State of the State address, Governor Bev Perdue proposed lowering the state's corporate income tax rate from 6.9 to 4.9 percent as a way to attract new business and new jobs to the state.

Perdue said the cut would make North Carolina's rates the lowest in the Southeast.

"This change will push North Carolina to the forefront in growing jobs for our people. And that, my friends, must be the number one priority for every one of us in this chamber tonight," she said.

The proposal earned a standing ovation from her largely Republican audience. But what would it cost?

  • According to the U.S. Census Bureau, North Carolina's current rate yielded $901 million in corporate taxes in 2009 (the last tax year for which data is available).
  • Lowering the rate from 6.9 to 4.9 percemt would be about a 29 percent cut.
  • 29 percent of $901 million is a little over $261 million.

$261 million is a chunk of money – more than half of what Perdue promised she could hold back if the legislature would give her emergency budget management power this year. So how's the state going to cover that loss, on top of the $2.7 billion shortfall? 

Supporters argue that the lower rate will attract more businesses, who in turn will pump more taxes into the state's coffers, helping to offset the loss. That may be, but it won't happen in time to help balance the budget that's due June 30.

We'll see more details in the governor's budget proposal, expected to be released Thursday.

1 Comment

This blog post is closed for comments.

Oldest First
View all
  • pbjbeach Feb 15, 2011

    In my personal opinion this current legisture is only seeking an at the wrong time the lowering of the coporate tax rate for the richest of their coporate instrest groups an thier special instrest groups without any regards for the actual citizens of the state an their needs. with thes propose cuts by the legisture to the states budget there will also have to be drastict cuts in the services that are affored to the citizens of this state. in my opinion this is not now the time to be reducing the coporate tax rates in this state seeing as that the state is already broke according the accounts from nearly every state agency across this state. the right thing to odo would be to temp[orarly actual increase the coporate tax rates so as to assiste the state an this governor in actually balancing the states budget without have to balance it agains on the backs of the citizen an state employee of this entire state with higher fees an cost of se4r4vices to these citizens rthe revenus to run th