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North Carolina Is a Poster Child for the Benefits of Tax Reform

Apr 25, 2018 by AFP

There is a reason North Carolina is often used as a shining example of how lower taxes can enable economic prosperity. North Carolinians have seen significant growth in that area, aligning with almost five years of cutting corporate and individual tax rates.  

In 2013, we made national headlines as the Tar Heel State passed a bold, pro-growth tax reform package. That act repealed the estate tax, introduced a single income tax rate and created a deduction for small business owners, among other much-needed changes.  

We built on that in 2015, further reducing personal and corporate income tax rates. 

Next year, in 2019, we’ll see even more reduction in individual and corporate income tax rates. Our flat individual income tax rate is set to drop to 5.25 percent.  

Pulling ahead of the growth curve 

“The economy is stronger now than it was a year ago, and it is beginning to look like an economy that has entered a true expansionary phase,” the Fiscal Research Division of the North Carolina General Assembly wrote in its January 2018 General Fund Revenue Update. “For North Carolina, current data on income and overall economic activity (i.e., Gross State Product) indicate that the state’s growth is starting to outpace average national growth.”  

What’s more, the U.S. Bureau of Labor Statistics shows that, as of January, the unemployment rate sits at 4.5 percent. That’s a small number, especially compared to 7 percent, the rate at the end of 2013.  

North Carolina is blossoming, and it has the potential to continue to do so. 

Atlantic Packaging, Charlotte Pipe and Foundry Co., The Hammock Source and others have been able to pay their employees four-figure bonuses since Congress passed the Tax Cuts and Jobs Act last December. And they aren’t the only North Carolinian companies giving these benefits to their workers.  

Low tax rates could maintain that trend. This is why we need to make sure our legislators don’t hike up those rates. Luckily, lawmakers are thinking about giving us the chance to make our voices heard on the issue. 

Taxpayers should have the final say 

The General Assembly is considering SB 75, a bill that would allow taxpayers to vote in November on a constitutional amendment that would cap the state personal and corporate income tax at 5.5 percent. Right now, the cap is 10 percent, which is uncomfortably high.  

North Carolinians deserve to keep our hard-earned paycheck in our pockets. Ask your lawmaker to support SB 75 and give North Carolina the best chance to keep growing.