North Carolina before and after the 2013 tax reforms

by Richard Borean, The Tax Foundation, November 5, 2015.

During the 2013 legislative session, North Carolina lawmakers adopted legislation fundamentally restructuring the state’s tax code. The package included tax cuts for both individuals and businesses, a simplified and more neutral tax system, and a revenue stream that is more reflective of the modern economy and better prepared to withstand economic swings. The reforms broadened, lowered, and flattened the individual income tax, reduced business taxes, moderately expanded the sales tax base, and repealed the estate tax.

In the two legislative sessions following the historic 2013 reforms, lawmakers made further improvements to the code, which will ultimately result in North Carolina having the 13th best structured tax code in the country once all changes are fully phased in, according to the State Business Tax Climate Index. These multi-year reforms had many moving parts, and while it’s important to view them as a cohesive unit, it is still valuable to understand the importance of each individual change made.

Through a series of charts and maps, North Carolina Illustrated: A Visual Guide to Tax Reform puts these reforms in perspective and provides insight on several key questions. First, what did North Carolina’s tax code look like before the reforms, in terms of the tax code but also in terms of the broader state economy? Second, what were the details of the tax changes, and how did they impact the state’s tax code? And finally, what can North Carolina do to further improve its tax code in the future to make it an even better place to live and do business?

This chart book aims to help readers understand the state’s tax system from a broad perspective. To do this, we review North Carolina in the context of six key competitor states: Florida, Georgia, Massachusetts, South Carolina, Texas, and Virginia. These states have similar economies to North Carolina in many respects and are competitors when it comes to economic development and attracting businesses and individuals to the state.

Each piece of North Carolina’s new tax code tells a story, and we know how important it is to put that story into a larger context. We hope that this book will help put these pieces together to provide an in-depth picture of the new, improved North Carolina.

These charts were created and compiled by Tax Foundation Economist Liz Malm in collaboration with Tax Foundation staff.

The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.

Read the full report: North Carolina Illustrated: A Visual Guide to Tax Reform

The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.

http://interactive.taxfoundation.org/nc-illustrated/#introduction