Business tax cuts in House budget likely to be part of Senate plan as well

A package of proposed tax cuts already in the House budget is working its way through the Senate.

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Laura Leslie
, WRAL Capitol Bureau chief
RALEIGH, N.C. — A package of proposed tax cuts already in the House budget is working its way through the Senate.

The Senate Finance committee approved the cuts Tuesday, and they could be on the Senate floor later this week.

The largest cut would be for businesses, dropping the franchise tax by 30 percent over two years.

That would mean $232 million less coming into the state treasury by 2020, but sponsor Sen. Jerry Tillman, R-Randolph, said Republican lawmakers wanted to phase out the franchise tax altogether.

"You know what that amounts to?" Tillman said of the franchise tax. "It's North Carolina saying we're going to tax you on your capital investment, on your property, on everything you own, for the privilege of doing business in North Carolina. Now, that's some way to say our doors are open, folks."

The package also includes a smaller cut to personal income taxes by increasing the standard deduction by 3.75 percent. That would save the average family $39 in state taxes each year.

The price tag for that would be $40 million by 2020.

Shopping online would mean paying sales tax on more purchases, however.

The plan would require third-party marketplaces like eBay, Etsy and Amazon Marketplace to charge sales tax. Under current law, such sites don't collect state sales tax, and Tillman said they should have to collect the same as brick-and-mortar businesses do.

"They've had a 7, 6.75 [or] 7 percent advantage over all of our mom-and-pops who are paying state taxes," he said. "So you can sell your golf shirts and golf shoes and golf balls 7 percent cheaper than our home-grown guy – not anymore."

The sales tax change would bring in an additional $135 million for the state by 2020.

Although the changes are relatively small when compared with tax overhauls the General Assembly has undertaken in recent years, Gov. Roy Cooper would rather invest the money businesses are saving in public education, according to spokesman Jamal Little.

"Businesses need a strong workforce more than they need additional tax breaks for corporations and the wealthy," Little said in a statement. "To achieve that, Governor Cooper would rather invest in higher teacher pay along with stronger public schools, community colleges and universities, and he looks forward to real budget negotiations with the legislature."

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