By overriding a veto from Gov. Roy Cooper (D-N.C.), the Republican-controlled North Carolina legislature enacted a new budget today that cuts the state’s personal and corporate income tax rates. Under this new budget, the state’s flat personal income tax rate will drop from 5.499 to 5.25% in January of 2019, and the corporate tax rate will fall from 3% to 2.5%, which represents a 16% reduction in one of the most harmful forms of taxation. The newly-enacted budget also cuts the franchise tax rate for S-Corporations.
This new budget, which received bipartisan support from a three-fifths super-majority of state lawmakers, builds upon the Tar Heel State’s impressive record of pro-growth, rate-reducing tax reform. Unfortunately, this latest round of tax relief in North Carolina will garner far less media coverage than the tax changes implemented in Kansas five years ago, even though North Carolina’s population and economy are both more than three times the size of Kansas's.
It's remarkable how much progress North Carolina has made in improving its business tax climate in recent years, going from having one of the worst businesses tax climates in the country (ranked 44th), to one of the best today (now 11th best according to the non-partisan Tax Foundation). When Republicans took total control of the North Carolina government in 2010, the state had the highest personal and corporate income tax rates in the region, at 7.75% and 6.9%, respectively. Thanks to enactment of multiple rounds of tax relief, beginning with the landmark 2013 tax reform act, North Carolina will soon have a personal income tax rate that is 30% lower than what the top rate was only four years ago. The corporate rate, having been reduced by more than 63% since 2013, is now the lowest corporate income tax rate among states that impose such a tax.
Read more at:
https://www.forbes.com/sites/patrickgleason/2017/06/28/forget-kansas-north-carolina-is-the-national-model-for-conservative-tax-reform/#455b67ce1389
