North Carolina Republicans Propose New Tax Plan That Would Make State Home To Top Five Business Tax Climate

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Posted by Americans for Tax Reform on Thursday, May 27th, 2021, 10:07 AM PERMALINK

North Carolina Senators introduced a tax plan this week that would provide significant tax relief to families and employers across North Carolina, leaving the nation’s ninth most populous state with a greatly improved business tax climate (improving from the nation’s 10th best, to 5th best, according to the Tax Foundation).

“That proposal, introduced as an amendment to House Bill 334, would cut North Carolina’s flat state income tax rate from 5.25% to 4.99%,” ATR’s Patrick Gleason writes in Forbes. “The corporate rate, which currently stands at 2.5%, would be phased out, making North Carolina the third state with no corporate income or gross receipts tax.”

The North Carolina Senate’s tax plan also cuts the franchise tax, raises the standard deduction by 18%, and increases the child tax credit. At the May 25 press conference announcing this new tax relief package, Senate Finance Committee Co-Chairman Paul Newton (R) explained that North Carolina Republicans have put the state in a position to provide further relief to individuals, families, and employers across the state due to a decade of conservative budgeting and sound governance.

“We have large cash reserves and we have yet another budget surplus for the sixth and seventh years,” Senator Newton said at the May 25 press conference. “The Republican philosophy, when government takes too much money from the people, is to give it back in the form of tax relief. In our view, it's never, never the government's money, it's the people's money. So we are proposing yet another tax cut because we believe people spend their money better than government does.”

“The state is in good financial shape, with a new revenue forecast due soon,” Dawn Vaughan reported in the News & Observer on May 26. “There is already a $5 billion surplus and $5.7 billion coming to the state from the federal American Rescue Plan.”

Americans for Tax Reform supports the tax relief package proposed by North Carolina Senators this week and urges North Carolina lawmakers to enact these pro-growth reforms before adjourning for the summer.

“I applaud Senators Paul Newton, Bill Rabon, and Warren Daniel for pursuing a new tax relief package that would increase household income, while expanding the job creating and sustaining capacity of North Carolina-based businesses,” said Grover Norquist, president of Americans for Tax Reform. “At a time when the Biden White House and Congress are pushing for unprecedented increases in government spending along with job-killing tax hikes, North Carolina Republicans continue lead by example in demonstrating the alternative, conservative approach to governing.”

“By both keeping the growth of state government spending in check, while continuing to pursue reforms that will further improve the state tax code, North Carolina Republicans continue to serve as a national model for conservative governance,” Norquist added. “North Carolina taxpayers are fortunate to have Taxpayer Protection Pledge signers leading both chambers of the state legislature and at the helm of finance committees. North Carolina voters’ decision last year to keep the GOP in charge of the General Assembly could soon pay dividends for North Carolina taxpayers once again.”

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