Critics of NC GOP tax policy want to stop corporate income tax cuts

Eliminating the state’s corporate income tax means more money for out-of-state corporations and less to support the needs of North Carolinians, critics said Monday.

They discussed bills that would freeze the corporate income tax at 2.5% rather than have it fall to zero in 2030. 

North Carolina’s corporate income tax rate was 6.9% from 2011 to 2013 and declined in steps over the years to 2.5% in 2019. Republican legislators’ budget plan has the corporate rate set to start falling again in 2025 until the tax is eliminated in 2030. In his budget released last week, Gov. Roy Cooper proposed halting the corporate tax cut. 

“Making sure corporations pay what they owe provides critical dollars to connect more people to  economic opportunity, and supports the expansion and start up of locally-owned businesses,” said Alexandra Sirota, executive director of the NC Budget and Tax Center said Monday. 

According to a 2021 poll, about two-thirds of North Carolinians oppose eliminating the corporate income tax, NC Policy Watch reported. 

The consensus revenue forecast presented last month showed corporate income tax revenue is 5% of total state revenues. Money collected from personal income taxes is 53% of state revenues. North Carolina has a $3.25 billion revenue surplus. 

North Carolina’s corporate income tax rate of 2.5% is the lowest among the 44 states that have such a tax.

Corporations benefit from taxpayer-funded infrastructure and services, including roads their employees travel to get to work, public education, universities, and childcare subsidies, said Sen. Lisa Grafstein, a Wake County Democrat. She is a primary sponsor of the Senate bill that would cancel the corporate income tax phaseout. 

Stopping the tax cuts is unlikely this year, with Republican legislative leaders talking about more tax cuts rather than tax freezes. House Speaker Tim Moore told WUNC he wants to consider a range of tax cuts.

Cassandra Stokes, democracy and economy coordinator for NC Black Alliance, said corporate tax cuts cost all North Carolinians. Lawmakers should focus on helping state residents and local businesses, she said. 

“Eliminating the corporate income tax will not help connect the vast majority of black-owned businesses to technical assistance, to new capital, or to new markets,” Stokes said.”Instead it would send dollars out of state to large, profitable corporations and give outsized benefits to shareholders who are overwhelming white and overwhelmingly wealthy.”