Talk about a hard sell: Roy Cooper told Charlotte Chamber leaders this week that he wants business people to oppose state corporate tax cuts because the proposed reductions would make it harder for North Carolina to invest in education, ranging from pre-kindergarten to Ph.D. programs in the UNC System.
Cooper says he believes many business leaders agree that North Carolina should spend more on its public schools and universities to maintain its progressive edge. Now, he wants them to take the next, harder step and oppose cuts. He didn’t provide any names of supportive executives during a chat with reporters in Charlotte.
Increased school funding “is more important right now than additional corporate tax cuts,” Cooper said. More CEOs looking at expanding into the state ask about educational quality than tax rates, he says.
State Republicans leaders say North Carolina’s economy is thriving largely because of tax cuts, spurring growth that enables the state to spend more on education. Almost two-thirds of state spending now goes for education. Many favor a Senate bill, passed in April, that would cut the corporate rate to 3% to 2.75% and then 2.5% over the next two years. The General Assembly’s fiscal research division estimates that a lower corporate rate would cut state revenue by $34 million next year, $119 million in 2019, and nearly $180 million by 2022.
The N.C. Justice Center’s budget expert, Alexandra Sirota, estimates the real impact on corporate tax revenue will be closer to $250 million annually because of related legislative actions. Two-thirds of the savings accrue to out-of-state businesses, she says. Of course, bill supporters say the lower rate makes North Carolina more attractive to companies looking to expand in the state.
The corporate tax cuts are in addition to more than $600 million less in revenue from personal income taxes, which are also being sliced in the same bill, the Fiscal Research Division notes.
The NC Chamber, which represents a lot of businesses, doesn’t share Cooper’s view.
Asked about its opinion of the Senate bill, here’s the group’s statement: “Together with advocating for investments in education and talent supply, the North Carolina Chamber supports Senate Bill 325 as these priorities work together to improve the business climate. The two are not and cannot be mutually exclusive if we want North Carolina to continue to be competitive.”
Whether the N.C. House will agree with the Senate’s plans will be among the legislature’s most interesting decisions in coming weeks.