Scott Cumbie

In a recent letter to party members, the North Carolina Democrat Party made this statement:

“… our nation has started to rebound and North Carolina is leading the way. Through the hard work of the Governor and State Legislature, we maintained our AAA Bond Rating – and important rating that tells companies that North Carolina is open for business. We have also recently been rated as one of the top states for business growth in the country. Our leaders have been working morning, noon, and night to revive our economy, creating new jobs, and helping families keep their homes.”

I was surprised and intrigued with the statement that NC is “one of the top states for business growth in the country.” What makes a state business friendly? Is it the state’s bond rating? That doesn’t seem likely. What a business really cares about is the cost of doing business.

Businesses are in business to make money. They sell a product or service for a price. When all the costs of doing business are subtracted from their total sales, they are left with a profit. In order to compete with other similar businesses, a business must keep the cost of doing business as low as possible so that they can set their prices to remain competitive and still return a profit.

When a new business starts up or a new business wants to open in another location, there are several things the business must consider:

• Accessibility to raw materials, infrastructure, transportation and employees
• Accessibility to customers
• Cost of taxes including income, property and business taxes, as well as, fees, red tape, etc.
• Cost of regulatory compliance

North Carolina is an ideal location when it comes to accessibility. We have a very mild climate, easy access to anywhere on the East Coast and a great network of roads, trains, airports and shipping. It’s the cost of doing business in NC that makes me question whether NC is one of the top states for business growth.

There are seven states that have no income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming), so the cost of doing business in those states is immediately lower than in NC, where we have a personal income tax rate of over 7% and a business tax rate of almost 7% with other surcharges and fees. Several of these seven states also have lower property tax rates than NC.

In NC, over regulation is a problem that makes it difficult and costly for businesses to conduct business. For example, in the health care industry, a medical facility must apply for a Certificate of Need from the state in order to build a new facility, or to add to or alter an existing facility. Receiving a Certificate of Need can take months or years which impacts that medical facility from providing additional services. For anyone that has attempted to start a business, the paperwork requirements just to comply with business taxes and employment taxes can be so overwhelming that is can discourage someone from starting a business or expanding it by hiring additional employees. Regulatory impediments are not good for businesses and they are not good for employees. California is a perfect example of what happens when a state’s taxes and regulations are too high, businesses will flee.

In reference to the business friendliness of NC, NC State Representation Dale Folwell has stated that, “money goes where it is invited and it stays where it is wanted.” We have seen the state and counties “invite” money (businesses) into the state by providing incentives in the form of tax breaks, tax rebates, property, etc. (remember Dell Computers and Caterpillar?), but our high taxes and regulations tell these same businesses that we do not want them to stay.

If we truly want NC to be “one of the top states for business growth in the country,” then we should eliminate all income taxes and property taxes on all individuals and businesses, or at the every least lower the tax rates and compliance costs. We must also eliminate all regulation that impedes a business from conducting business. If we were to do these two things, we would no longer need to provide incentives to new businesses to locate here. These changes would encourage new businesses to come into the state, it would encourage existing businesses to expand here and not expand into another friendlier state, and it would encourage NC residents to start brand new businesses.

It is ironic that the NC Democrat Party is claiming that NC is “one of the top states for business growth.” The Democrat party has controlled the state legislature for 110 years, since 1898. For the last 110 years, the Democrats have been in control, so there is only one party that can be help responsible, the Democrat party. The business “unfriendly” atmosphere in NC has been created by the Democrat party.