Archives

Uncategorized

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

As our state leaders continue to look for ways to give more and more tax cuts to profitable corporations, these corporations continue to find ways to avoid paying their fair share of taxes. It is a win-win proposition: Heads they win; Tails they still win!

A report released today by the Institute on Taxation and Economic Policy and Citizens for Tax Justice finds that 269 Fortune 500 companies collectively avoided paying $73.1 billion in state corporate income tax between 2008 and 2012. Nine of these multi-state corporations are headquartered in North Carolina and earned more than $51 billion in combined profits during this period.

The nine NC-based multi-state corporations paid an average overall corporate income tax rate of just 3.7 percent, which is well below North Carolina’s 6.9 percent statutory rate at the time. Unfortunately, our state leaders prefer to focus on optics rather than reality. Read More

NC Budget and Tax Center

“We can’t afford it.” This is the prevailing refrain of state leaders nowadays in their efforts to explain away or rationalize their waning support for investing in North Carolina’s future.

Whether the issue is pay raises for K-12 teachers and other state employees, supporting targeted economic development initiatives, protecting the state’s natural resources and environment, one repeated excuse is that revenue is not available for such public investments.

This excuse was used once again in a memo by Art Pope, State Budget Director, in response to the UNC Board of Governors’ (BOG) 2014-15 budget request. In the memo, Pope informs the BOG that its budget “simply is not realistic” and warns that funding the respective budget request “would require the Governor and General Assembly to make major reductions in other state agencies and programs, such as our courts, the “K-12” public schools, and health care.

North Carolina is NOT broke. The costly tax plan passed by the NC General Assembly and signed into law by Governor McCrory last year has created a self-imposed budget challenge. This challenge is occurring, as Pope acknowledges, even as the economy is improving. Read More

NC Budget and Tax Center

Last year state leaders passed a tax plan that will overwhelmingly benefit the wealthy and profitable corporations. The plan does little to rid the tax code of costly tax loopholes, it makes the state’s upside-down tax system even worse, and it reduces annual revenue by more than $650 million once all the new tax changes are in place.

As Gov. McCrory and state leaders try and “find’ revenue to provide a modest pay raise to only a portion of North Carolina’s public school teachers, more tax cuts for profitable corporations look to be on the horizon.

This week BTC released a policy brief that highlights an arcane tax policy change proposed by members of the NC General Assembly’s Revenue Laws Committees. This tax change – referred to as a single sales factor (SSF) apportionment formula – would only consider the sales component in determining the amount of state income taxes paid by corporations. The state’s current tax system uses a formula that considers a corporation’s property, payroll, and sales in North Carolina.

This tax change would provide a tax cut to only certain corporations, with no guarantee of job creation or a boost in economic growth for the state and would reduce revenue available for public investments by $90 million for FY 2015. This revenue loss would be in addition to the massive annual revenue loss under the tax plan passed last year. Read More

NC Budget and Tax Center

Yesterday, President Obama released his fiscal year 2015 budget proposal that includes several important improvements to the pro-work Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). When taken together, these improvements will reduce poverty among low-wage workers and their families, reduce income inequality, strengthen work incentives, and give a boost to North Carolina’s economy—all without adding a dime to the deficit.

Under the President’s proposal, approximately 381,000 low-wage workers without children in North Carolina would get a much-needed income boost. Currently, a childless adult working full time at the minimum wage pays significant federal income and payroll taxes, but receives an EITC of less than $30. In fact, childless workers are the sole group of workers that the federal tax system actually pushes below the poverty line, according to the Center on Budget and Policy Priorities.

Fortunately, the President’s proposal would reverse course and boost tax fairness by expanding the now-tiny EITC for childless workers, an idea that has growing support across the political spectrum. The proposal would also make workers between the ages of 21 and 25 eligible who are currently excluded from qualifying for the EITC. Read More