Members' Top Concerns Receive Full Attention at the Capital
Following through with being a member-driven organization, we have continuously asked you what your top business concerns are. After numerous polls and studies we have heard our members loud and clear in that taxes top the list of your concerns. It is apparent that our members, both large and small businesses have a unified voice in terms of the need for tax reform in North Carolina.
Our members share the common objectives of creating and implementing a better tax system that enhances competitiveness and fairness and which assists in creating a business climate conducive to investment, growth, and job creation.
Our aim is to deliver a modern, competitive and fair tax system with a reduction in compliance costs facing our state's businesses. We are striving to deliver results for our members that will provide them with the tools to best develop their businesses.
The measures we are working on in the General Assembly affirm our commitment to maintain the momentum of business tax reform and deliver results to our members. We are working closely with pro-business lawmakers in the fight for tax reform:
Revitalizing our Manufacturing Sector:
Energy Sales Tax Exemption
Manufacturers today face unprecedented challenges with rising energy costs among them. North Carolina is the only state in the southeast except Georgia and Alabama that does not already exempt energy sold to manufacturers from the sales tax. That makes our state vulnerable in the state-to-state competition for manufacturing jobs and investment.
Our Chamber is advocating for a phase out of the sales and use tax on energy sold to manufacturers as included in the state House's budget proposal and in Senate Bill 3 in the state Senate. We are asking state leaders and lawmakers to capitalize on this opportunity to keep North Carolina manufacturers in business here and help them remain competitive.
Fighting for Small Businesses: PIT Reduction
North Carolina's top personal income tax rate is due for another reduction this year back to 2000 levels. If the tax rate decreases as scheduled, it will mean another 0.25% decrease in the PIT rate to 7.75%. North Carolina's top marginal personal income tax rate is the 8th highest in the nation.
Currently the Senate supports allowing the PIT rate to decrease as scheduled. The House and Governor support leaving it at 8%. Our Chamber will continue to work with pro-business lawmakers to ensure that these provisions are included in the final budget.
Why is business interested in a personal income tax reduction? Because, put simply, personal income taxes are a business issue. Many small businesses in North Carolina are taxed under the personal income tax structure instead of the corporate tax structure. This adjustment is imperative to economic development of North Carolina businesses and we are working for you to achieve this.
Advocating for Fairness: Tax Appeals Process
Our Chamber has been vigorously advocating for a bill to amend the current tax appeals process. A Senate bill is currently being considered that would reform the process for the review of disputed tax matters to provide taxpayers an opportunity for an independent hearing outside of the Department of Revenue prior to paying the tax.
Reform in this area is a priority for our Chamber because our customers have identified this as a priority. Various studies validate the message from our members by revealing North Carolina's vulnerabilities in this area when it comes to tax law and significant opportunities for improvement.
Defending Against Harmful Tax Reporting Proposals:
Keeping NC on Par with Peers
Our Chamber is building strong opposition to a proposal that would require corporations to file a combined income tax report. This proposed tax change would result in a complex method of taxation, leading to litigation and increased administrative and compliance costs for both the taxpayer and the State.
Passage of mandatory unitary combined reporting will put North Carolina out of step with a majority of states, creating an anti-competitive business environment. No other state in the southeast mandates such a requirement except West Virginia.
The adoption of mandatory combined reporting would place North Carolina behind the curve on state tax policy. It would create uncertainty for taxpayers and the state would increase administrative and compliance costs. Most importantly, however, it would cause a major setback in our state's efforts to attract and retain new jobs and investments.
Legislative Advocacy Will Continue Fighting on Tax Issues
Our Chamber will continue to ensure that our members' voices are heard as the General Assembly finalizes its budget. We will work with pro-business lawmakers to achieve those tax measures that will benefit your businesses. You told us what you need and we will advocate to bring you direct results.