Where do we stand?
Date posted: June 7, 2011
Whenever a North Carolina budget is passed, it looks like a reduction in the state corporate income tax rate will be a part of it. Is the move to reduce this tax rate because we are far out of line with other states? N.C. State University economist Mike Walden responds.
“Forty-four states in the country have a corporate income tax. And if you rank North Carolina among those 44 in terms of our rate, we’re the 26th highest. So, 25 of those 44 states actually have a higher rate. So, on that basis it doesn’t look like we’re very high. But if you look at the states in our vicinity of the country and usually what North Carolina’s compared to is Virginia, Tennessee, South Carolina, Florida, Georgia, and then of course North Carolina. Among those six states, we do have the highest rate. So, I think that’s what critics of the corporate income tax rate point to that. In terms of competing with our peers here in the region, we’re perhaps non-competitive on that rate.
“Also, it should be pointed out North Carolina’s corporate income tax rate is a flat rate. All the businesses pay that rate. But eight states who have average rates above ours also have a variable rate, and some of those variable rates that apply to some businesses (are) actually lower.
“So, as in every … comparison, it really depends on who you’re comparing it to. But you can make a case that particularly in the southeast; North Carolina’s corporate income tax rate is high.”
Category: Economic Perspective