Those pesky researchers at Ernst & Young and the Council on State Taxation have done it again. They simply refuse to develop a methodology for ranking state business tax burdens in such a way that North Carolina's ranking will come out where the state Chamber of Commerce and the free-market fundamentalist "think tanks" like to claim that it is – as in at the top of list.
The latest version of the 50-state study was released last week. Among its findings are that businesses pay 36.9% of all state and local taxes in North Carlina and fully 3.9% of the total Gross State Product is consumed by business taxes. (Keep in mind that percentage of taxes paid by businesses includes lots of taxes that are technically paid by businesses but are often passed on to consumers in the form of higher prices.) The study certainly has its flaws but it clearly reenforces what we have been saying here at the Budget & Tax Center for more than a dozen years – focusing simply on nominal tax rates and focusing on state taxes while ingoring local taxes does not provide an accurate assessment of our tax levels relative to other states.
So don't be fooled by the hype about NC's taxes. We have a lot of things that need to be addressed in order to compete effectively in the global economy, such as educating the current and future workforce of our state. The one thing we don't need to do is cut taxes on corporations so that we can compete with those two states that ranked lower than we did – Deleware and Oregon.