June 11, 2013
FOR IMMEDIATE RELEASE
CONTACT: Brian Balfour (919) 834-2099 Brian.Balfour@NCCivitas.org
RALEIGH — The North Carolina Senate Finance Committee today introduced a tax reform package that eliminates the corporate tax, lowers and flattens personal income taxes, and eliminates the sales tax on food.
“Civitas has advocated for the elimination of income taxes for several months now, and it is encouraging to see the Senate step up and eliminate what many economists believe to be the state tax most harmful to economic growth: the corporate income tax,” said Civitas Institute Policy Director Brian Balfour.
In an extensive study examining the impact of state taxes on economic growth published by Civitas last December, research concluded that states without a corporate income tax enjoyed a sizeable economic growth advantage over those states with a corporate income tax. Indeed, during the last decade, states with no corporate tax enjoyed a larger growth premium than even those states with no personal income tax but with a corporate tax.
“Another significant benefit of eliminating the corporate income tax is that it strikes a blow against the corporate welfare game,” added Balfour. “The majority of targeted tax credits that benefit politically-connected corporations at the expense of their competitors are granted through the corporate tax. The Senate plan would remove that aspect of political privilege and move the state toward a more level playing field.”
The newly released Senate tax reform package would make North Carolina even more competitive than the House plan and the previously discussed Senate plan. The Tax Foundation indicated that those plans would improve North Carolina’s business tax climate ranking significantly from the current slot of seventh worst in the nation. The Foundation projected the House plan would improve North Carolina’s ranking to 19th best and the previously-discussed Senate plan would boost our ranking to 13th best.
With the elimination of the corporate tax, however, the Tax Foundation reports that the new Senate reform plan would vault North Carolina into the sixth most business-friendly tax climate.
Lastly, research has shown that the corporate tax places a drag on worker wages. Empirical evidence strongly suggests that removing the financial and compliance burden of the corporate tax will result in higher employee pay.
The Civitas Institute is a nonpartisan think tank based in Raleigh, NC. More information on the Civitas Institute is available at www.nccivitas.org, or contact Jim Tynen at firstname.lastname@example.org or (919) 834-2099.