Legislator Proposes Tax Breaks
By Mike Hixenbaugh
Rocky Mount Telegram
Friday, May 30, 2008
N.C. Rep. Bill Daughtridge is leading Republican legislators in a push to give small and big business owners a major tax break in 2008.
Daughtridge, R-Nash, introduced a bill Wednesday that would exempt corporations from paying state taxes on the first $85,000 they make this year.
The proposed legislation, with the backing of more than 30 Republicans, was referred to the N.C. House Finance Committee.
However, the Democratic majority in both chambers, while working in recent weeks to fund various projects in the 2008-09 budget, has expressed little interest in passing legislation that would cut into the state's revenue.
Daughtridge is at least hopeful, though, that the bill will garner bipartisan support and pass by the end of the short session, he said.
"There's going to be some people interested in this over time," said Daughtridge, one of the vice chairmen of the House Commerce, Small Business and Entrepreneurship Committee. "We've got a variety of people on the bill, and I'm sure more will jump on and support the initiative as we go along. But with any legislation, it's always an issue of money."
In terms of revenue, the tax exemption would be the equivalent of implementing a 1 percent corporate tax cut across the board. However, by instead exempting the first $85,000 of income, the bill would be a greater benefit to small businesses and new companies, said Daughtridge, who is in the midst of a campaign for N.C. state treasurer.
The idea is to make the state a better place to do business, Daughtridge said. As it stands, North Carolina has the highest corporate income tax rate of any state in the Southeast.
Mary Wells, a Rocky Mount dry cleaning business owner named the 2008 National Federation of Independent Business small business owner of the year in North Carolina, said it's "about time someone does something to help small business owners."
Wells does not, however, agree entirely with what Daughtridge and other Republicans are proposing.
"I think if there was a cap on the legislation so big corporations weren't benefiting from the exemption, it would be better," said Wells, a past delegate to the White House Conference on Small Business. "I think they should quit giving away all those incentives to big business and then cut the corporate tax rate instead. That way everyone would benefit."
Other small business owners also would likely support the legislation if a cap were added, Wells said.
As House members prepare to roll out their proposed budget early next week, Democratic leaders explained Thursday they want to do as much as they can - raising teacher salaries and providing foreclosure relief, for example - without raising taxes.
Gov. Mike Easley's 2008-09 budget proposal called for a 7 percent pay increase for teachers to be funded by higher cigarette taxes. Legislators who don't want tax increases, though, say the state budget allows for such a drastic pay hike.
"We need to raise our teacher salaries to the national average, but we don't want to raise taxes," N.C. Sen. A.B. Swindell, D-Nash said. "We'll probably look to find another way."
Given those desires, a tax break that would benefit big business owners such as Daughtridge, who owns Daughtridge Gas and Oil Co., might not mesh with the state's spending plans.
"With the Democratic majority, I'm not absolutely confident this bill will pass," Daughtridge said. "But what it would do is it would create jobs and give small businesses a chance. In the long run, the state would more than recover from the initial revenue loss."
