April 18, 2013. Cutting corporate income taxes will not provide an economic boon for North Carolina and could in fact harm the state’s ability to invest in the areas that help build the foundation of a strong economy, according to a new report released today by the Budget and Tax Center, a project of the North Carolina Justice Center.
Deep corporate income tax cuts proposed by North Carolina lawmakers will put at risk key investments that North Carolina businesses rely on, such as an educated and skilled workforce, good roads to allow people to get to work and goods to market, safe communities, effective court systems, and innovative research at state universities.
“Cutting investments in education, transportation or public safety – all of which boost the state’s economy in the long run – will jeopardize North Carolina’s economic future,” said Alexandra Forter Sirota, director of the Budget & Tax Center and author of the report. “This would hurt businesses, which need a well-educated, highly productive workforce, access to markets and supplies, sound infrastructure, and a high quality of life for their employees far more than this tax cut.”
Click here to read “Cutting Corporate Income Taxes Won’t Be an Economic Boon for North Carolina.”
The report discusses several key reasons why the tax cuts won’t work for North Carolina, including:
It will cost the state a tremendous amount of money. North Carolina has to balance its budget every year, so every dollar given away in a tax cut has to be made up for either with a tax increase on another business or individual or with a cut to state services, such as our public schools. This cancels out any benefits from the tax cut.
It would benefit a very small number of businesses. Just 7 percent of NC businesses are even subject to the corporate income tax.
It won’t result in more jobs. Business owners hire people when customer demand grows, but cutting a business’s taxes will do nothing to increase this. Additionally, this tax cut would not put anywhere near enough money in most owners’ pockets to pay for a new employee.
“The corporate income tax is incredibly important to North Carolina,” said Sirota. “Cutting this tax would give away much-needed revenue that pays for schools, roads, and other public investments that are positioning our state for a prosperous future, and that’s simply too high a price for North Carolinians – both individuals and businesses – to pay.”