New York Governor Andrew Cuomo (D) and the Democratic-run state legislature in Albany are moving forward with a new budget deal that will raise income taxes in what is already a relatively high tax state. Many are now concerned this cash grab will exacerbate the ongoing loss of businesses and people from a state that already had one of the nation’s highest population outflow rates. Meanwhile the inverse is about to occur in North Carolina, a popular destination for ex-New Yorkers.
While New York is perennially one of the nation’s top losers when it comes to population, North Carolina has experienced some of the highest population inflow rates in the U.S. in recent years. North Carolina lawmakers are now poised to take the opposite approach from New York when it come to taxes in a way that will serve to make North Carolina an even more welcoming destination for those looking to flee New York’s high tax burden, onerous regulations, and high cost of living.
While Governor Cuomo will soon enact a budget that increases New York’s top state income tax rate from 8.82% to 10.9%, North Carolina Senator Paul Newton (R) recently introduced legislation to cut North Carolina’s income tax from 5.25% to 4.99%. New York and North Carolina are also heading in contrasting directions when it comes to taxation of business. Both states are among the 16 nationally that impose a franchise tax on businesses based on their value. But Governor Cuomo’s new budget deal raises New York’s corporate franchise tax from 6.5% to 7.25%, whereas Senator Newton’s bill will reduce North Carolina’s franchise tax burden.
In addition to making North Carolina’s tax code more regionally, nationally, and globally competitive, Senator Newton’s bill would offset and counteract the pain that is about to be inflicted on individuals, families, and employers by the federal tax hikes being pursued and likely to be enacted by President Joe Biden and the Democratic-run Congress.