Cutting Corporate Income Taxes Won’t Be an Economic Boon for North Carolina

Deep corporate income tax cuts being proposed by state lawmakers will put at risk key public investments that North Carolina businesses rely on for an educated and skilled workforce, quality roads, police and fire protection, court systems that protect intellectual property, and innovative research coming out of North Carolina’s universities. While proponents claim that the tax cuts would spur job creation and economic growth, in reality they are likely to harm the economy, in both the short- and long-term.

Under the two main proposals, the corporate income tax rate would be lowered to 6 percent from 6.9 percent. Both proposals also would change the formula used to determine a multi-state corporation’s income tax in North Carolina. The state currently uses a formula based on a corporation’s property, payroll and sales in North Carolina, with sales factored in more heavily. Under the proposals being considered by North Carolina lawmakers, the formula would change so that only the sales factor would be used.