BTC BRIEF: Corporate Tax Cuts Offer Only False Hope
By Edwin McLenaghan
Public Policy Analyst, BTC
- Cutting the state corporate income tax rate from its current 6.9 percent to 4.75 percent would cost the state $307 million in the next fiscal year, with the annual cost rising to $410 million after five years.
- Proponents claim that corporate tax cuts will create jobs, but economic analysts in other states have estimated the cost per new job of state corporate income tax cuts would be between $83,000 (California) and $97,000 (Oregon). Furthermore, economic research suggests that most of the new jobs are likely to be filled not by current state residents, but by in-migrants to the state.
- According to the most recent data, a mere 217 businesses paid three-fifths of all state corporate income taxes in North Carolina. Thus, approximately three-fifths of any corporate tax cut would flow to 0.12 percent of North Carolina’s 175,000 private employers.
- North Carolina policymakers have better, more cost-effective alternatives for promoting economic growth and job creation in the state: customized job training, manufacturing extension services, temporary wage subsidies to create new jobs for those facing long-term unemployment, and expanded access to high-quality early childhood education and child care.