NC Chamber’s Position: Tax reform is important to North Carolina's business community because tax policy is de facto economic development policy. The Chamber recognizes the following key factors when discussing tax reform with policymakers:

1) NC’s competitive position is paramount if our state is going to attract, retain and grow good jobs for working families. 

2) In crafting tax policy it is important to avoid taxing investments and production. Doing so discourages both. Tax rates are important, but what you tax is equally important.

3) Businesses need certainty, in both what the tax policy is and in how it is administered and enforced. Uncertainty discourages capital investment.

4) If the sales tax base is going to be expanded, we should avoid, to the extent possible, taxing business-to-business services. This is closely related to the principle of avoiding taxing production. Business pays a lot of sales tax today – about 40 percent of the sales tax collected in North Carolina is paid by business. It is the second largest tax business pays after the property tax.

The 2011 legislature has pledged to examine overall tax reform in North Carolina, though a $2.4 billion state budget gap may delay comprehensive reform until 2012.

2011 Legislative Victories:

BILL SUMMARY	PRO-BIZ or NO-BIZ	OUTCOME
Tax Relief for Small Businesses (H200) Supported provision in state budget that gives small businesses and start-up companies, whose gross receipts do not exceed $825,000, a tax exemption for the first $50,000 in net income, to spur privatesector job creation		PASSED
Expiration of Temporary Tax (H200) $1.3 billion put back into the hands of North Carolinians by letting temporary sales tax, reduced from 5.25% to 4.25%, and corporate and personal income tax surcharges expire July 1, 2011, as scheduled.		PASSED
Reform Unemployment Insurance Tax Structure (S99) Worked to create a more sustainable unemployment insurance system by supporting the authorization of the Department of Commerce to hire a consultant to analyze the state’s UI system including tax structure, benefits and ensuring sound administration of the fund.		PASSED Read more on this issue here.
Promoted Competitive Tax Climate (H619) Successfully pushed tax reform to create a predictable and fair tax system by clarifying combined tax return laws for multi-state businesse.		PASSED Read more on this issue here.