Senate Bill 622 would roll back the state's franchise tax, gradually cutting it from $1.50 per $1,000 of a company's tax base to $1 for each $1,000.
Sen. Ralph Hise, R-Mitchell, said the bill would cut taxes by about $140 million a year by the second year.
Hise said the bill stops at $1, but his goal is to get rid of the franchise tax entirely at some point in the future, and his bill "would put us on a path" to do so.
Sen. Jerry Tillman, R-Randolph, said he'd like to see the rate hit zero over five years.
The bill also increases standard deductions, cutting taxes for individual taxpayers. The standard deduction for a married couple would go from $20,000 to $20,750 under the bill.
Tillman said the proposal isn't "totally in its final form," but he and Hise both said it was worked out with House Finance committee chairs.
Hise said the bill, "represents the culmination of our agreement."
Hise and Tillman are two of the three chairs on the Senate Finance committee, which writes tax policy. The third, Sen. Paul Newton, R-Cabarrus, is also a sponsor on the bill.
The three senior finance chairs in the House didn't immediately return messages Thursday seeking comment. A spokesman for Gov. Roy Cooper indicated the governor was against the bill.
“Businesses need a strong workforce more than they need additional tax breaks for corporations and the wealthy," spokesman Jamal Little said in an email. "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.”
Cooper will have more say in the policy than in past sessions because Republicans no longer hold a veto-proof majority in the legislature.
The bill was filed this week, just ahead of a filing deadline for Senate legislation. A House version is likely, but that chamber's deadline has not yet arrived.
Hise and Tillman said the franchise tax, which taxes businesses not on profits but on their worth, is an unfair drag on the economy.
"It's basically taxing you on the privilege of being able to work in North Carolina," Tillman said.
It's unclear how the legislature would backfill the budgetary hit that rolling back the tax would create, but state revenue has been running ahead of forecasts, leaving extra money on the bottom line. Cooper's budget would spend that money, with a particular focus on increased education spending and new debt to build schools.
Republican legislative leaders have rejected that budget, and Senate President Pro Tem Phil Berger said Thursday that he'd like to lower the franchise tax, if possible. Among other things, it's a drag on the state in annual rankings on business friendliness, he said.
"I think that would be good for business in North Carolina," Berger, R-Rockingham, said.
The Republican-controlled legislature has lowered corporate and personal income tax rates in the state for the past several years.