NC Budget and Tax Center

Deep in the weeds of the House budget is a provision that would authorize the state to issue just shy of $300 million in new debt to pay for five large projects. Each of these projects (listed below) has merit, but this proposal raises two important questions:

1) Why do we have to issue debt to pay for these projects?

2) What will we have to give up down the road when the bill comes due?

North Carolina shouldn’t have to borrow the funds for these projects. Don’t forget, the tax cuts passed in 2013 already cost the state nearly a billion dollars this year, much more than would be needed to cover the costs of these projects.

The 2013 plan will also slash corporate taxes even further over the next two years. If the scheduled corporate tax cuts go into effect, it will cost the state an additional $100 million next year and another $300 million the year after that. If we hold off on additional corporate tax cuts, North Carolina could pay for these projects outright.

Ultimately, this means throwing money out the door in interest payments to keep cutting taxes for wealthy individuals and corporations. The Fiscal Research Division estimates that interest payments on the new bonds will start at $22.7 million next year and then rise past $28 million in the subsequent years.

The interest payments alone would be enough to cut the waiting list for pre-K in half, or put 1300 teacher’s assistants back into North Carolina classrooms, or avoid raising tuition at Community Colleges (as is slated to happen in the House’s budget).

Overall, the House spending plan is moderate compared to budgets we’ve seen over the last few years. But, even while it’s taking a step in the right direction, the House still cannot get around the enormous hole that we started digging in 2013. That’s why, when we need to invest in North Carolina’s future, the House is reaching for the credit card instead of writing a check.

Projects to be funded with bond revenues:

  • Phase 1 of new Highway Patrol Training Academy ($30 million)
  • DHHS Medical Examiner Lab ($13 million)
  • NC State Engineering Building ($65 million)
  • UNC Charlotte Sciences Building ($90 million)

Appalachian State Health Sciences Building ($71 million)


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. Read More

NC Budget and Tax Center

The tax bill signed into law this year is fiscally irresponsible and bad for our state, but lawmakers could improve the situation by repealing part of the corporate income tax cut and paying for the rest by closing ineffective tax breaks that only benefit certain companies.

The corporate income tax cuts in the final tax plan are one of the biggest reasons why the state will have less revenue to invest in our roads, schools, and communities. The tax plan cuts the corporate income tax rate to 5 percent by 2015, from the current rate of 6.9 percent, and will reduce annual tax revenue by around $217.9 million in fiscal year 2014-2015 alone.

Meanwhile, the tax plan does little to rid the state’s tax code of costly and wasteful tax breaks that only help certain corporations or industries. Read More

NC Budget and Tax Center

The tax plan signed by Gov. McCrory includes huge tax cuts for profitable corporations that are unlikely to boost economic growth in the state and will reduce revenue for investment in our public schools, healthcare services for the elderly, and other important public investments.

By 2015, the corporate income tax rate is cut to 5 percent from the current rate of 6.9 percent and will reduce annual tax revenue by around $217.9 million in fiscal year 2014-2015. The corporate income tax rate is cut even further in future years if revenue meets a certain target – which is actually below existing revenue projections – and would reduce annual revenue by more than $423 million. These benefits will flow to less than 10 percent of North Carolina businesses. Read More

NC Budget and Tax Center

When Thanksgiving rolls around, no one wants to watch someone else eat all the turkey and then have to pick up the grocery bill all by themselves. But that’s what’s happening in our nation’s budget debate—highly profitable multinational corporations are using special tax loopholes, credits, deductions, and outright giveaways to avoid paying their fair share of taxes while asking the rest of us to pick up the tab for fixing our nation’s budget challenges through spending cuts to key investments that help grow the economy. Even worse, at a time when many families will be celebrating their Thanksgiving blessings or sharing those blessings with less fortunate friends and neighbors, many in Congress are trying to protect these tax loopholes while simultaneously cutting federal food assistance for hungry families.

That’s why N.C. Policy Watch and the N.C. Budget and Tax Center are continuing to shine a light on corporate tax dodging. In recent years, corporate profits have neared record highs while corporate tax collections are at a 30-year low, so now is the time to raise new revenues, rather than asking hungry families to bear the brunt of addressing our nation’s budget challenges. And an excellent source of new revenues involves the billions of dollars in corporate tax loopholes, deductions, credits, and outright giveaways that allow too many multinational corporations to avoid paying their fair share of taxes. So instead of giving all the turkey to profitable corporations and asking the rest of us to foot the bill, let’s ask these profitable companies to pay their fair share for Thanksgiving dinner.

To underscore this message, N.C. Policy Watch and the N.C. Budget and Tax Center are continuing to profile a number of corporate tax avoiders with strong connections to North Carolina (Click here to read previous profiles of Duke Energy, Merck & Co. and International Paper).

And keeping with the holiday theme of food, this month, we’re focusing on the highly profitable fast food giant Yum! Brands, revealing the following:

  1. the size and scope of their businesses,
  2. the taxes they have avoided paying in recent years, and
  3. the methods they use to accomplish this.

Read More