In an op-ed published by the Triangle Business Journal last week, Ray Starling, NC Chamber general counsel and president of the NC Chamber Legal Institute, analyzes some recent threats to North Carolina’s competitive tax climate.

As Ray said in the piece, “maintaining a competitive and predictable tax climate requires good tax laws, as well as fair administration and execution of those laws.” Unfortunately, the North Carolina Department of Revenue’s application of the law could jeopardize the state’s competitive standing. You can read the op-ed in full here or you can find excerpts below.

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“Sound tax policy and administration is an essential component of North Carolina’s competitive business climate. Only six years ago, North Carolina’s tax climate was among the worst in the nation, clocking in at 44th…

“Maintaining a competitive and predictable tax climate requires good tax laws, as well as fair administration and execution of those laws. Improper administration can undermine good policy and do just as much harm as bad policy…

“In a case decided last month by the United States Supreme Court, the DOR attempted to tax an out-of-state trust solely because a trust beneficiary – who had received no money from the trust – was temporarily resident in North Carolina…

“The Court’s decision is not surprising. What is surprising is that the DOR sought to tax the trust in the first place…

“In addition to this concerning case, the DOR is also auditing hundreds of North Carolina individuals and businesses who invested in renewable energy partnerships…

“The tax credit program helped make North Carolina one of the country’s top producers of renewable energy. Now that the credits have sunset and the state has received the full benefit of the investment that the credits encouraged, the DOR has done an about-face and is disallowing credits for the last three years of the program…

“Predictability and certainty are the cornerstones of a flourishing business environment. By enforcing the tax law in a way that offends “traditional notions of fair play” and by changing the rules of the game on taxpayers after the game was over, the DOR is threatening North Carolina’s favorable tax climate…

“Vigilant tax enforcement is important for the rule of law, and everyone must pay their fair share of taxes. However, when an administrative agency gets out of bounds, the rule of law suffers, and in this instance, so might North Carolina’s competitive tax climate.”

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To read the full op-ed, click here.

Gary J. Salamido
Chief Operating Officer and Acting President
NC Chamber