NC Budget and Tax Center

Corporate Income Tax Cuts Would Harm, Not Help State’s Economy

North Carolina lawmakers are barking up the wrong tree when they claim that corporate tax cuts, such as those proposed in the state Senate, will spur job creation and economic growth. In reality, those tax cuts will do more harm than good, in both the short- and long-term.

Every dollar that Senate Bill 677 would give away in a tax cut has to be made up for with a tax increase on another business or individual or with cuts to schools, health care and other vital services that provide a strong foundation for our economy.

This tax plan would cost the state $344 million once the tax cuts were fully phased in, according to the Legislature’s Fiscal Research Division. During a Senate Finance Committee meeting this week on the legislation, its sponsors noted that the tax cuts would be part of a larger tax overhaul that will be “revenue neutral” – meaning the lost revenue will be made up from somewhere. But they’re not saying where exactly.

Lawmakers are most likely to raise the sales tax and apply it to a broader range of goods and services to pay for the corporate tax cut. That means low- and moderate-income families would be digging deeper in their pockets for a handout to profitable corporations and wealthy individuals. Meanwhile, lawmakers decided to let North Carolina’s Earned Income Tax Credit—our best tool for easing the impact of the sales tax on low-income working families—expire at the end of this year.

This is the wrong direction for North Carolina, as lawmakers weighing similar tax shifts in other states – notably Louisiana and Ohio – have started to realize. Instead of counterproductive tax cuts, we need to invest in the kinds of things businesses, and North Carolina’s economy, really need to thrive: good schools; top-flight, affordable colleges; good roads; safe communities; and a healthy, highly skilled workforce.

9 Comments

  1. Alex

    April 11, 2013 at 9:55 am

    I guess we could do nothing like we’ve done for the last 4 years, and more than likely get the same results and continue to lag the rest of the nation.

  2. david esmay

    April 11, 2013 at 11:24 am

    Corporate tax cuts produce zero jobs, but provide huge windfall profits for companies and limit the state’s ability to raise revenue. What business in it’s right mind would hire managers whose business model reduces cash flow and the ability to function?

    More Irving Kristol/Arthur Laffingstock nonsense from the righty corporate fascists.

  3. Alex

    April 11, 2013 at 2:12 pm

    Unfortunately david, we hired Obama to answer your question !

  4. david esmay

    April 11, 2013 at 2:17 pm

    Ad Hominem Alex, Is the President now the governor and GA of NC?!

  5. Doug

    April 11, 2013 at 4:05 pm

    Dont forget dave,
    Taxes only contiunue to promote a corrupt and bloated government that only devotes the resources to the incorrect place at the incorrect time. The business of the state is not to raise revenue and grow on a continual basis….no wonder our governement is in such as sad state of affairs having followed the esmay model for so long.

  6. david esmay

    April 11, 2013 at 9:08 pm

    The Reagan model of deficit spending is what brought on the sad state of affairs, that and George the dullard doubling down on supply side b.s.. Taxes are the price of civilization.

  7. Doug

    April 11, 2013 at 10:42 pm

    Ah, but dave, you forget that Reagan was only letting through the democrat wishes for more spending. Although deficits can be good, Barry has taken the concept to the verge of exponential increases…oh and I think since Reagan has been out of office there have been more Democrat led years….I don’t see them putting the brakes on spending.

    You are quite the troller dave, it is somewhat enjoyable exposing the scientific Law of Ignorance of Liberalism upon your posts.

  8. Alex

    April 12, 2013 at 7:03 am

    Duh………david ! Reagan accumulated 1.4 Trillion in debt for 8 years mainly because of Cold War defense spending. Obama accumulated 5.7 Trillion in only 4 years, and will add another Trillion this year. For the life of me, I can’t understand why you can’t see that. is there a problem with math here ?

  9. Doug

    April 12, 2013 at 1:03 pm

    to expand on Alex, at least the spending on the Cold War defeated the USSR…although here that is probably not considered a good thing….all we will have to show from Obama’s $5.7 trillion is…..I can’t think of anything…..guess we will find out in the bankruptcy proceedings. It will be interesting when we hit $22 trillion in a couple of years and the reckoning comes. If you don’t think the poor and middle class will be destroyed when the bond markets fail due to that much debt then you have no view of past history, or reality.