- Under Democratic leadership, North Carolina imposed higher tax rates than its neighbors
- Today, we compete with our neighbors for having the lowest rates
North Carolina used to be known as a high-tax state in a relatively low-tax region.
After a decade of tax reforms, the Tar Heel State is far more competitive with its neighbors when it comes to major tax rates.
Under Democratic leadership in 2010, North Carolina was highest among neighboring states in two of the three major state tax rates, and second highest in the third tax category. Our top personal income tax rate and the corporate tax rate were both higher in North Carolina than all of our neighbors. The combined state and local sales tax rate ranked second highest.
The table below details the specific figures, with each tax’s ranking for the highest rate highlighted in yellow:
+Note: In 2010, a temporary tax “surcharge” was also assessed to personal income taxes; adding another 2% or 3% in taxes starting on individuals earning $60k and married filers earning $120k. A 3% surcharge was also assessed on all corporations
Conversely, thanks to a decade of conservative leadership, North Carolina has been a regional leader in lessening the tax burden on its citizens.
North Carolina now ranks no higher than third in the three major categories of taxes. North Carolina went from having the highest top personal income tax rate in 2010 to third – higher only than Tennessee, which doesn’t tax earned income.
Our corporate tax rate similarly dropped from highest to lowest in the region, while our combined state and local sales tax rate fell from second highest to third highest.
These two tables paint a very clear picture: A decade of conservative leadership has made a significant difference in North Carolina’s tax burden. Our state once stood as a high-tax state in a relatively low-tax region under the Democratic majorities of the past.
But now North Carolina competes with its neighbors for having the lowest tax rates. The changes have resulted in accelerated job and income growth, while still providing more than sufficient revenues as evinced by significant revenue surpluses in five straight years.
Voters should keep this in mind when they consider what’s at stake this November.