PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

A Bold, BIPARTISAN Tax Cut in North Carolina

By at 24 November, 2021, 12:02 pm

Perhaps the White House and Congress will take note.

by Raymond J. Keating – 

On November 18, Governor Roy Cooper of North Carolina signed a state budget into law. That budget included a bold tax relief package that, when fully implemented, will make North Carolina one of the most attractive states in the nation to live, work, and startup, build and operate a business.

For good measure, this was a bipartisan affair, with state legislative Republicans leading the charge for tax cuts and assorted Democrats in the legislature joining in. Governor Cooper, a Democrat, negotiate the final deal and signed the budget.

So, what does this budget do on the tax front? Two big changes were implemented.

Corporate Rate to Phase Out, Personal Rate Reduced in Steps

First, North Carolina’s 2.5 percent corporate income tax will be phased out completely over the period of 2025 to 2031.

That’s right, North Carolina is wisely eliminating it corporate income tax.

Second, the state’s personal income tax will be reduced in steps, going from 5.25 percent to 3.99 percent as of July 1, 2027.

That takes the state rate from roughly the national average to one of the lowest rates among the states that impose a personal income tax. Of course, this also means that the state’s individual capital gains tax will be reduced in the same way.

These are all significant plusses for making North Carolina more competitive among the states and internationally, and incentivizes entrepreneurship and investment in the state. Yes, North Carolina proves that Republicans and Democrats can come together and implement sound, pro-entrepreneur, pro-growth policies. Perhaps the White House and Congress would like to take note.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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