According to a recent article from the Washington Business Journal, when Virginia Governor Terry McAuliffe proposed to drop his state’s corporate income tax to 5.75 percent in 2017, it was the recent reforms passed in North Carolina that made him realize he needed to take action. Our state’s reduced corporate income tax rate has been a major highlight in a series of competitive measures state leaders have taken in recent years – thanks in part to encouragement from business leaders like the NC Chamber – and this article makes it clear that other states are starting to take notice.
The first round of tax reforms passed in 2013 had groups like the Tax Foundation calling North Carolina’s approach the “gold standard” in competitive, pro-growth tax reforms. A second round in 2015 dropped the corporate income tax rate to 4 percent starting next year, with a further reduction to 3 percent in the cards when expected state revenue targets are met – a likely proposition. Those changes were enough to elevate North Carolina’s corporate income tax climate to the 4th most competitive nationally in the Tax Foundation’s latest rankings.
What this means is that, by the time Virginia’s proposed reduction to 5.75 percent could take effect in 2017, companies in North Carolina will likely be seeing the benefits of a tax on business nearly 3 percentage points below that state’s reduced rate. When that happens, North Carolina will have the lowest corporate income tax rate in the nation among states who levy one, along with a host of additional competitive benefits thanks to the recent reforms we have seen in our education, regulatory, infrastructure and legal landscapes. So while it’s nice to see other states taking notice and following suit, it’s even more important than ever to keep our eye on the future and remain ahead of the competition.
Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber