Dylan Coombs: A pro-business state shouldn't tax businesses for existing

Contributing sentiments towards policy:

63% : Data from the Federal Reserve of St. Louis correlated to the rankings from the Tax Foundation show a statistically significant correlation between new small business filings and a higher Tax Foundation score.
57% : The legislature should have advanced a plan to completely dismantle the franchise tax alongside the corporate income tax by 2030 -- a move that would have significantly improved the business climate in North Carolina and brought new business and capital investment into the state.
57% : Instead, we should make repealing the franchise tax a top priority as we continue to make this state a wonderful place to invest and do business.
56% : For each place higher on the Tax Foundation ranking, a state receives approximately 15 more small business applications per 100,000 residents.
55% : Past reform In 2021, the General Assembly passed SB 107, improving the state's business climate and ratifying a plan to phase out the corporate income tax by 2030 -- a huge win for all businesses in the state.
53% : Unlike most taxes, including the corporate income tax, which are based on an individual or corporations' ability to pay, franchise taxes are levied on the value of a business's net worth -- including its buildings, vehicles, machinery and other assets -- and must be paid regardless of a business owner's ability to pay.
51% : Similarly, the legislature made changes to the franchise tax, simplifying its structure and making compliance more achievable for small businesses.
50% : That is a huge problem for small businesses who do not have large legal and accounting departments designed to construct tax minimization strategies.
50% : " A recent Tax Foundation report identified the franchise tax as North Carolina's "single largest structural weakness."
49% : I spoke to Whitney Hill, owner of Carolina Web Consultants, a small web services business based in Raleigh who was unaware that he even pays the franchise tax on a yearly basis.
45% : The harm The problem with the franchise tax is simple: it punishes businesses for being in business.
45% : "I don't like having to pay like 20 different taxes," Hill said.
45% : " The franchise tax burden is particularly troublesome in a state where small businesses are the backbone of the economy, making up 99.6 percent of all businesses in the state and employing nearly 2 million people.
44% : The recent passage of the budget bill came with several important and beneficial provisions, including a bump in teacher and law enforcement pay, personal income tax cuts, and continued OSP funding.
44% : Don't let the name confuse you; this is not a tax on your local fast food franchise, or even a one-time payment to become a franchisee.
44% : No, this is an annual tax on the net worth of a business, and it is extremely harmful to both small businesses in the state and the economic growth of North Carolina more broadly.
43% : The NC Chamber of Commerce foundation agreed with this assessment and has long called for the repeal of this tax, which they say "runs counter to modern tax principles and creates disincentives for investment.
41% : Donald Bryson, CEO of the John Locke foundation, made a compelling case for repeal in a January 2025 column ("End North Carolina's franchise tax to spur growth").
35% : However, phasing out the corporate income tax while leaving the franchise tax in place does not make any sense.
35% : While other states in the Southeast repeal harmful tax policies, North Carolina risks falling behind.
34% : Despite hopes that lawmakers would rectify this misjudgment in the most recent budget, no mention of the franchise tax was found. Tax climate score increases small business In the recent 2026 Tax Foundation business tax climate rankings, the Tax Foundation ranked North Carolina third, citing the decreasing corporate tax rate.
22% : However, it should have repealed one of the worst tax policies in the state: the franchise tax, which stifles investment, hurts small businesses and degrades the economic climate of our great state.

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