North Carolina’s tax reform has been nothing short of historic, coupled with prudent spending that has transformed our economy. There are still outdated aspects of our tax code that deserve to be put out to pasture, chief among them the franchise tax.
Operating essentially as a tax for having the temerity to exist, the franchise tax disincentivizes investments in our state, with an overwhelming majority of states not having one at all.
The franchise tax punishes companies of all sizes for growing, regardless of size, by taxing them for their assets every year, from a set of forks in a restaurant to a large airplane in a hangar. These assets are taxed in perpetuity by the state for being assets of the company, so even if the company were to experience a down year they would still be taxed for purchases made in different years.
Legislative leadership frequently talks about getting out of the way and letting entrepreneurs and small businesses drive our economy forward. By eliminating the franchise tax they have an opportunity to do just that.