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Editorial: Corporations should pay more than “next to nothing” in taxes

In case you missed it, a Sunday editorial in the Greensboro News & Record told it like it is when it comes to the matter of corporate taxes in North Carolina. It was entitled “Next to nothing.”

“What’s less than a lower corporate income-tax rate? What some businesses actually pay.

North Carolina legislators cut the state’s corporate income-tax rate last year from 6.9 percent to 6 percent. It’s scheduled to drop to 5 percent next year.

Republican lawmakers said the cut was needed to create a better business climate and make the state more competitive with its neighbors. Yet, cutting the rate to 5 percent isn’t very meaningful to a corporation that pays barely more than 1 percent.

Duke Energy, based in Charlotte, paid an average of 1.3 percent of North Carolina profits in state corporate income tax from 2008 through 2012, according to a study released last week by Citizens for Tax Justice and the Institute for Taxation and Economic Policy.

They looked at 269 profitable Fortune 500 companies and found that many pay significantly less than the official tax rates in their states. Those headquartered in North Carolina include Progress Energy — which has now merged with Duke — BB&T and Greensboro-based VF Corp….

The companies aren’t wrong to use these tax provisions lawfully. They owe a good return to their investors, and paying less in taxes means they should charge their customers less.

But state policy makers should make sure essential services are paid for. North Carolina is cutting jobs at its Department of Environment and Natural Resources at a time when stricter regulation is required. It could help avoid those cuts if the tax code didn’t give big breaks to big businesses. Ordinary taxpayers don’t get the same favors.

As for more breaks, ‘The first step in any state’s corporate tax reform should be ensuring corporations are actually paying taxes,’ said Meg Wiehe, a director at the Institute for Taxation and Economic Policy. That means North Carolina should eliminate tax deductions before it further cuts rates.

Is it really a plus for North Carolina if some of its largest corporate citizens contribute so little to running state government? A tax rate of 6.9 percent might have been too high, but 1 percent is much too low.”

Read the entire editorial by clicking here and the entire ITEP report by clicking here.

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