The Tax Foundation puts out an outstanding annual ranking of state’s business tax climate – essentially an index comparing how economically competitive each state’s tax code is. As many of you already know, North Carolina ranks a dismal 7th worst in the current Tax Foundation Index – which helps explain our unemployment rate being stuck at fifth highest in the nation for several months now.
Today, the Tax Foundation writes a detailed summary and comparison of the NC Senate and House tax reform plans. If you aren’t already familiar with the bills, I highly recommend reading the article.
Of particular interest, however, is what impact the respective tax plans would have on North Carolina’s ranking in the business tax climate index. According to the article’s authors, both plans would improve North Carolina’s ranking by 25 slots or more, with the Senate plan boosting NC’s ranking to 13th best and the House plan to 19th best.
The article concludes with some further recommendations:
Ideally, the final piece of legislation will flatten and lower the individual income tax, lower the corporate income tax and franchise tax rates, significantly broaden income tax bases by closing costly tax expenditure programs, broaden the franchise tax base to include all companies with limited liability, and expand the sales tax to include services without causing tax pyramiding.