North Carolina among top states for business tax climate
(The Center Square) – North Carolina has one of the best business tax climates in the country, according to the Tax Foundation’s 2022 State Business Tax Climate Index.
The state ranked 11th out of 50 states for its overall business tax climate for 2021. It dropped one spot below its ranking of 10th last year.
The index compares states on more than 120 variables in the five major areas of taxation: corporate, individual income, sales, unemployment insurance and property taxes.
The state recently passed legislation that would cut billions of dollars in taxes for North Carolinians. The index did not take into account changes made by the legislation, including eliminating corporate taxes and increasing the standard deduction.
North Carolina received an overall score of 5.61 out of 10 for its business climate. Contributing to that score was its corporate tax, where the state received 6.14 points and ranked fourth in the U.S. North Carolina’s top corporate tax rate is 2.5%. The state ranked fourth for its corporate tax in last year’s index.
The Tax Foundation also ranked North Carolina in the top 20 among states for its individual tax, unemployment tax, property tax and sales tax rates.
Despite its high ranking, Tax Foundation analysts criticized North Carolina for using tax incentives to attract businesses to the state.
“Lawmakers make these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for an undesirable business tax climate,” the Tax Foundation wrote. “A far more effective approach is the systematic improvement of the state’s business tax climate for the long term to improve the state’s competitiveness.”
Wyoming was the highest-ranked state in the country, followed by South Dakota and Alaska. New Jersey was the lowest, ahead of New York and California.
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