With sluggish economic recovery and continued high unemployment rates, North Carolina policymakers, at all levels, have rightly placed a greater emphasis on how to create jobs and grow our state’s economy. It should come as no surprise that other states are also working around the clock to become more competitive for jobs and economic growth.
North Carolina faces an uphill climb in this battle, as it is still gaining its footing from the hard hit of the Great Recession. North Carolina lost more than 330,000 jobs by the time the recession bottomed out in February 2010; and in the first decade of the 21st century, our state had a net loss of 27,400 jobs.
If North Carolina is serious about jumpstarting our economic and job creation engine, tax reform is essential to a competitive strategy.
Comprehensive reform of North Carolina’s tax code has not occurred since the 1930s. As the state has evolved, the policies governing how the state collects taxes have become complicated and outdated. In fact, North Carolina’s current tax code ranks 44 on the Tax Foundation’s State Business Tax Climate Index – one of the 10 worst states in the nation for a competitive tax climate.
However, North Carolina has a plan to turn this around. According to the Tax Foundation, Sen. Phil Berger’s updated version of House Bill 998: Tax Simplification and Reduction Act, if enacted, would skyrocket the state’s competitive position from 44 to 6.
Competitive tax policy has garnered nationwide debate and discussion. In forecasting the economic future for our state, employers understand the important role tax policy plays – tax policy is de facto economic development policy. North Carolina is one state, among several, looking at ways to make its tax policy more competitive.
As the year goes on, it is possible that North Carolina might be the first, and only, state this year to achieve effective, meaningful tax reform.
The Tax Simplification and Reduction Act focuses on several principles that job creators believe to be critical underpinnings to any discussion of tax modernization: competitiveness, equity, efficiency, simplicity and certainty.
First, to ensure long-term growth, North Carolina’s state and local business taxes, as well as mobile capital investment (e.g. corporate income, business property tax), should be competitive with other states. Equity is necessary to make sure the taxes imposed are in line with benefits received, and efficiency delivers stability over the economic cycle and sufficient and predictable revenues.
Additionally, North Carolina’s tax policy should provide greater simplicity and certainty for taxpayers. The laws should be understandable, transparent, predictable and stable.
The Tax Simplification and Reduction Act achieves these goals and dramatically bolsters North Carolina’s position among other states. With all that is at stake in North Carolina, we cannot sit on the sidelines in tax reform. Our state has the opportunity to lead the nation in bold tax reform that will create greater economic prosperity and jobs for all North Carolinians.
The key to our ability to provide quality educational opportunities, required infrastructure and needed services for our citizens most in need is to create a robust economy where jobs are being created.
Now is not the time to be timid. It is a time for thoughtful, bold action that will make North Carolina a shining example for all.
Dale Jenkins is CEO of Medical Mutual and a member of the NC Chamber Executive Committee.