Over the last few years, state leaders and pro-growth organizations like the NC Chamber have worked together to build one of the premier business climates in the nation right here in North Carolina. Today, our state is attracting diverse investments and top talent from across the nation and beyond. Just last month, we secured another competitive accolade, with a second-place finish in CNBC’s latest America’s Top States for Business survey.
We’ve come a long way from the days when North Carolina frequently ranked in the bottom half of all states on our ability to compete. But cultivating a world-class investment and talent climate takes constant effort. Though numerous important policy decisions confront our elected leaders at this decisive point in the 2021 legislative session – from solving acute talent supply challenges to expanding high-speed internet in underserved areas – NC Chamber members have consistently reported that two issues in particular require critical attention this session to support our long-term competitiveness: transportation revenue modernization and franchise tax repeal.
Nearly a dozen states have enacted or are enacting some style of tax reform this year, and many are exploring novel solutions to update their transportation revenue streams. North Carolina can choose to be proactive and join these leaders – or we can take the reactive path and risk falling behind. Recently, the NC Chamber team launched twin social media campaigns to convey to people across North Carolina why repealing our regressive franchise tax on business investments and enacting a 21st century transportation funding strategy are so vital for our continued success.
You can learn more about these priorities by visiting the links above. As we share these messages on Twitter, Facebook, and LinkedIn, you can follow along and share our content using the hashtags #KeepCompetingNC (franchise tax repeal) and #SafeTravelsNC (transportation revenue modernization).
We have been quite vocal this past year about the critical need for North Carolina’s leaders to begin the process of truly modernizing our transportation revenue streams. In this, we have been fortunate to have the partnership of the aligned organizations supporting our Destination 2030 Coalition. The connection between a well-funded transportation network and a healthy, competitive business climate is intrinsic. As we explain in our #SafeTravelsNC campaign, however, modernizing our approach to transportation funding is not just about our economy – it’s also about ensuring the safety and well-being of the millions of people who use our transportation network every year.
The need for franchise tax repeal is a more challenging issue to communicate. There are plenty of myths and misinformation – or just plain misunderstandings – about what this tax really does and why it’s so harmful. Contrary to popular belief, the franchise tax does not only apply to “franchised” businesses; it impacts a broad array of companies with assets and investments in North Carolina. Since job creators derive the value of their assets from the income those assets generate – and since they already pay taxes on that income – the franchise tax effectively double taxes many businesses for investing and expanding economic opportunity in North Carolina.
The franchise tax especially harms struggling businesses and those posting losses – like far too many of our small and mid-sized businesses during the pandemic – because they pay the same tax regardless of the income they generate. This harmful tax also deters investments that come with large upfront capital expenditures, which generally translate to a substantial franchise tax burden in our state. For this reason, the franchise tax serves to chill the kind of high-impact investments that can fuel entire local economies. It would perhaps be most descriptive to call our franchise tax an annual “right-to-compete tax” for North Carolina business – a burden businesses in most states don’t have to contend with. We are now among a dwindling list of states still imposing this regressive right-to-compete fee, as others across the nation continue to rid themselves of their version of this tax.
The question for North Carolina is this: Do we really want to be the last state to get rid of our burdensome franchise tax?
Our elected leaders deserve our appreciation for their work to secure a world-class business climate for our state. When facing key decisions in recent years, they have more often than not shown both vision and courage to keep North Carolina moving forward. In the coming weeks, as legislators work to negotiate a state budget, the NC Chamber’s advocacy team will be focused on ensuring they take the next steps to cement our status as the best state to live and do business.
In this important work, we are grateful to have the help and support of job creators and other growth-minded partners across our state.