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A group ranked states on taxes. Here’s how NC compares.

A file photo shows a federal tax form.
A file photo shows a federal tax form. Bloomberg News

A Washington-based think tank that advocates for low taxes has ranked North Carolina as the 11th most competitive tax code in the country.

The Tax Foundation released its 2018 State Business Tax Climate Index on Tuesday, and North Carolina’s overall ranking is unchanged from last year's survey.

The state ranked highest for corporate taxes – third in the country – as well as sixth in unemployment insurance taxes and 13th in individual income taxes, up from 15th last year. But the state ranked 20th in sales taxes and 32nd in property taxes. The Tax Foundation said in a news release that it "ranks states based on their tax structure, not their tax burden. States with complex tax codes that distort business decisions do poorly, while states with transparent, neutral, fair tax codes score well."

Joseph Kyzer, a spokesman for House Speaker Tim Moore, pointed out on Twitter that the state's latest corporate and personal income tax cuts weren't included in this year's rankings, but will be factored in next year. The corporate tax rate will soon drop from 3 percent to 2.5 percent, while the individual income tax rate will drop from 5.499 percent to 5.25 percent.

Patrick McHugh of the left-leaning N.C. Budget and Tax Center cautioned that the ranking system "doesn't actually tell us much about how the economy is doing."

"This ranking does not appear to give any thought whatsoever to whether the revenue is adequate to pay for goods and services," he said. He also noted that North Carolina ranks lower in property taxes because state tax cuts have shifted the burden to local governments.

Colin Campbell: 919-829-4698, @RaleighReporter

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