Better Governing Now » See What The Tax Foundation Is Saying About North Carolina


See What The Tax Foundation Is Saying About North Carolina

Publisher's note: This post, by Brian Balfour, was originally published in the Budget & Taxes section of Civitas's online edition.

 Late last week, the Tax Foundation — the nation's leading independent tax policy research organization since 1937 — released its book "North Carolina Illustrated: A Visual Guide to Tax Reform."

 Packed with informative graphs and charts, the book is separated into three parts: North Carolina Before, The New North Carolina, and What's Next for North Carolina?

 The first section paints a picture of North Carolina's business tax climate along with several other economic measures before our state's historic tax reform. Among the main findings included in this section, before the 2013 reforms:

 The book moves on to the second section, which provides analysis of those 2013 tax reforms and how they altered North Carolina's fiscal landscape.

 The final section offers opportunities for further improvement to North Carolina's tax code. Among the most relevant suggestions and supporting data:

  • North Carolina (along with the nation) has transitioned from a goods-based economy to a service-based economy. Broadening the sales tax base to services would reflect the modern economy and be key in keeping tax rates low across the board.
  • There are still 51 targeted tax carve-outs for corporations in NC's tax code. Ideally, the corporate income tax would be eliminated, but if the state insists on levying this tax, it should be applied equally to all businesses. The special tax exemptions narrow the tax base, which drives up tax rates on those left paying the tax, and increases the distortions in the marketplace.
  • North Carolina is one of only 18 remaining states that levy a capital stock tax. This direct tax on business capital is especially discouraging to the capital formation that is crucial to economic growth.

 The Tax Foundation's latest publication provides a valuable contribution to the public policy arena in North Carolina. Legislators, policy analysts, reporters and interested taxpayers alike can benefit from the wealth of information presented in this visually appealing work.

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