Senate Bill 622, Tax Reduction Act of 2019, would make several changes to North Carolina’s tax code, and result in a net tax reduction.
The most significant provisions include a reduction in the franchise tax, and an increase in the standard deduction for individual tax filers.
Reducing the franchise tax helps encourage greater capital investment in our state, resulting in more jobs and bigger paychecks. Increasing the standard deduction enables workers to keep more of their earnings.
The bill does, however, include changes that would increase the tax burden on North Carolina’s economic activity. Specifically, SB 622 shifts the tax burden to “facilitators” of online shopping like eBay and Amazon, along with facilitators of short-term housing rentals like AirBnB. These changes would result in more taxes being collected by the state.
Moreover, the sunset date of a few targeted tax incentives are included in this bill, namely those for historic rehabilitation projects, jet fuel purchases for qualifying airlines, and racing fuel for the motorsports industry.
The net impact according to the bill’s fiscal note would be an overall tax reduction of roughly $500 million over the next five years.
In spite of the negative aspects of the bill, SB 622 would net a half-billion tax cut for North Carolina and make our state a more competitive place for investment.
Civitas Action believes that for these reasons, SB 622 would be a net positive for our state’s economy.
Civitas Action plans to grade any vote in the Senate or House on Senate Bill 622. The vote for freedom on SB 622 would be yes.
Civitas Action is a 501(c)(4) non-profit that educates and informs North Carolinians on policy issues and the actions of their elected officials.