Every year the Tax Foundation publishes the State Business Tax Climate Index that allows taxpayers, businesses and policymakers an easy comparison of how their state’s tax systems relate. This ranking of the states is based on tax policy, and has been very important in North Carolina over the last few years. During the 2013 legislative session, North Carolina lawmakers looked at the State Business Tax Climate Index very carefully and framed their tax reform legislation to make North Carolina more competitive among its neighbors.
Before 2013, North Carolina had a surprisingly high tax burden when compared to its southern neighbors. The index ranked North Carolina 44th in the country – meaning only six states were less competitive than North Carolina. The tax rates in North Carolina had narrow bases and high rates for many of the taxes included in the index. According to the most recent index that was released today, here is what North Carolina is thanks to comprehensive tax reform. The Tax Foundation estimates once all reforms are fully phased in, North Carolina’s overall ranking will be 13th best in the country.