@NCCapitol

@NCCapitol

Bill would roll back NC corporate taxes over time

Posted April 9, 2013

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— Corporations doing business in North Carolina would see their income taxes decrease in the coming decade under a tax reform bill reviewed by the Senate Finance Committee Tuesday. 

The measure is unlikely to move forward on its own. Rather, Tuesday's discussion was part of an "education process" that the committee has pursued on tax reform over the past month. In a series of briefings, the committee has examined different aspects of what a potential tax reform plan might look like.

Senators are still two weeks away from unveiling a master tax reform bill, Sen. Bob Rucho, R-Mecklenburg, told the committee. 

The measure reviewed Tuesday, Senate Bill 677, would begin the phase out of corporate income tax in 2014 in favor of a new franchise tax. As described by Rucho and a bill summary produced by legislative staff, it would reduce North Carolina's corporate income tax rate to 6 percent by 2015.

The intent, Rucho said, is that reductions would continue on into the future until the corporate income tax disappeared entirely.

The bill would also change how franchise taxes work. Right now, companies pay based on a formula calculated from sales, property owned and payroll.

"What property and payroll are are investments in North Carolina," Rucho said.

The state, he said, should not tax those investments. Like the income tax, the franchise tax portion of the bill is phased in over the next three years. At the end of that time, the franchise tax would look only at a company's sales.

In exchange for lower and simpler corporate income and franchise taxes, companies would lose many of the exemptions and loopholes that apply just to their industries. The state loses some $9 billion to such exemptions every year, Rucho said. 

Sen. Tommy Tucker, R-Union, asked about what would happen when corporations lost their exemption for donations to charity.

Rucho said that companies could still donate but that those donations would no longer be subsidized by taxpayers.

"Taxes should not impact business decisions," Rucho said.

Cedric Johnson, a policy analyst with the liberal-leaning N.C. Budget and Tax Center, said Rucho's approach would not help the state's economy.

"Cutting corporate taxes is unlikely to create economic growth," Johnson said. Businesses, he said, care more about things such as a well-trained workforce rather than state taxes.

16 Comments

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  • The Contractor Apr 10, 1:12 p.m.

    "What property and payroll are are investments in North Carolina," then why is my property and payroll taxed? you going to rollback personal income taxes and quit taxing me on my cars and house every year? crying shame the GOP legislature in control isn't looking out for the citizens of this state, but only for their cronies in business.

  • uscnnc Apr 10, 1:04 p.m.

    Saw a MSN article that had North Carolina in the top 10 over taxed states. We came in at number 7.

  • davidgnews Apr 10, 11:29 a.m.

    Guess who will pick up the tab?

  • ILoveDowntownRaleigh Apr 10, 11:13 a.m.

    "This is not corporate welfare." - research9

    Yes, this IS corporate welfare.

    "It simplifies the state corporate tax system by making a blanket tax on revenue while removing tax loopholes." - research9

    Just close the loopholes, period. I don't see a logical connection there to the idea of drastic corporate tax cuts, and transferring that tax burden to citizens.

    "Removing the tax on property incentivizes investment within NC...makes our state look very attractive..." - research9

    The only thing that would make our state look attractive would be a progressive governor and legislature who showed minimal corruption (no gerrymandering, no conflicts of interest, loading review boards with donors and relatives, etc), responsiveness to citizen input (Dix, voter-ID, etc), and the wisdom to avoid embarrassing and backward social interventions (you don't need examples on this!).

  • Plenty Coups Apr 10, 10:22 a.m.

    "Yes, the big bad boogeymen that pay the salaries of 100,000s of people across the state of NC are being incentivized to grow and pay the salaries of more employees. How dare they!"

    Yes, and the big bad boogeymen who buy all the goods that these companies offer are now going to be disincentivized to buy these things as there will be higher sales taxes to pay for these tax cuts.

  • research9 Apr 10, 8:57 a.m.

    This is not corporate welfare. It simplifies the state corporate tax system by making a blanket tax on revenue while removing tax loopholes. Aren't liberals always talking about removing loopholes?!

    Also, by removing the tax on property it incentivizes investment within NC. I think this is a great move. It encourages exapansion of current businesses and makes our state look very attractive against other states for companies looking to relocate, start up, or open a new branch.

    Yes, the big bad boogeymen that pay the salaries of 100,000s of people across the state of NC are being incentivized to grow and pay the salaries of more employees. How dare they!

  • wral mods blow close my account Apr 10, 8:51 a.m.

    Roll back the tax on business and onto the middle class. Gotta love NC GOP.

  • corey3rd2 Apr 10, 8:32 a.m.

    Take away the tax deduction for donations and watch all that corporate matching funds business disappear. What company needs to waste its cash on a children's hospital when they'd rather just give back to their investors.

  • rlsmith5 Apr 10, 8:29 a.m.

    This is payback to Duke Energy and Art Pope and his businesses. These people could care less about the average voter and there taxes. Just do as Refublicans always do and look after big business.

  • readme Apr 10, 8:18 a.m.

    Everyone is slamming this as corporate welfare, but that is not the case. There are other provisions in the tax code besides the rate, many at the federal level, that should be changed and can be considered welfare. The rate itself is actually high and makes us uncompetitive with other countries. It amazes me that people can complain that we are soft on corporations and call for more taxes and tougher labor laws, then act bewildered when companies off-shore jobs or just eliminate them. Duh. Turn that finger around.

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