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The Economic Reality for Smalll Buisness in North Carolina

Press Release

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"Our small business is headquartered in North Carolina, but high taxes and transportation costs in North Carolina make it harder to compete. What's worse, we only have 95 employees, but need to divert significant resources away from production just to navigate the maze of overlapping federal, state and local regulations. Government should help businesses succeed, not make it more difficult to compete. Pat McCrory came to visit our business, and after talking with him I'm confident he's the right man to lead our state and help small businesses succeed and create jobs."

-- David Wilhoit, VP of Sales at Mother Murphy's Inc. of Greensboro, N.C.

High Taxes

According to the Tax Foundation, North Carolina Ranks 44th in Overall Business Tax Friendliness (2012 State Business Tax Climate Index, Tax Foundation, 1/25/2012)

North Carolina has the Corporate Income Tax Burden in the Region (State Corporate Income Tax Rates, 2000-2012, Tax Foundation, 2/16/2012)

South Carolina: 5 percent
Florida: 5.5 percent
Virginia: 6 percent
Georgia: 6 percent
Tennessee: 6.5 percent
North Carolina: 6.9 percent
Over 450,000 NC Businesses File as Individuals, Facing the Highest Income Tax in the Region
(Fiscal Research Division of the NCGA, 2012)

NC Companies Prefer Long Term Tax Reduction over Short Term, Gimmicky Tax Incentives

"Approximately 14.5% of non-incented companies and 21.7% of incented companies stated it was better to offer select incentives to certain businesses, while 85.5% of non-incented companies and 78.3% of incented companies stated it was better to reduce taxes impacting businesses taxpayers and their owners. A majority of companies in both groups favored reduced taxes to incentives." ("An Evaluation of North Carolina's Economic Development Incentive Programs: Summary of Analysis, Findings and Recommendations," University of North Carolina Center for Competitive Economies, 1/21/2009)

Regulations and Healthcare

Small Businesses Ranked North Carolina "C-" in Regulations, One of the Worst in the Country (May 2012 Small Business Survey, in partnership with Kauffman Foundation)

In January, North Carolina State Auditor Found Permitting Process in Disastrous Condition

"DENR does not have adequate procedures in place to ensure that the permit processing data maintained electronically in its management information systems is complete and accurate." ("Performance Audit: Department of Environment and Natural Resources, Express Permit Processing," State Auditor Beth A. Wood, January 2012)
"A review of the permit files for each of the six permit types with an express option found that randomly selected computer records had missing or inaccurate data that directly affected the accurate calculation of permit processing times" ("Performance Audit: Department of Environment and Natural Resources, Express Permit Processing," State Auditor Beth A. Wood, January 2012)
"Overwhelming Majority" of Small Businesses Negative On National Health Care Law's Impact
"A new study by the NFIB Research Foundation indicates that the overwhelming majority of small business owners do not expect the law to reduce cost or regulatory burdens, and nearly two-thirds agree that the law will result in premium increases but not in better care." (Study: "PPACA One Year Later: Small Business Owners Expect Costs to Rise," NFIB, 7/25/2011)

National Healthcare Law to Increase Taxes on NC by $4 Billion Annually, Add $1.1 Billion to Medicaid Costs

"Obamacare will impose significant new Medicaid costs on states and constitute a major federal usurpation of long-standing state authority in regulating private insurance." (Edmund Haislmaier and Brian Blasé, "Obamacare: Impact on States," Heritage Foundation, 7/1/2010)
"The Heritage Foundation estimated that the PPACA will add nearly 630,000 North Carolinians to the [Medicaid] program at a seven-year (2014-2020) cost to state taxpayers of nearly $1.1 billion." ("Reforming North Carolina's Medicaid Program," John Locke Foundation, 5/9/2011)
"Taxes -- federal and state -- paid by North Carolina are estimated to increase by about $4 billion each year to fund the expansion." ("Reforming North Carolina's Medicaid Program," John Locke Foundation, 5/9/2011)

Jobs and Employment

Overall, North Carolina Ranks 41st in Private Sector Job Creation Over the Last Decade (US Bureau of Labor Statistics)

85% of Small Businesses Nationally Are Not Hiring, Optimism Ranking "Remains Historically Weak"

"U.S. small-business owners who aren't hiring -- 85% of those surveyed -- are most likely to say the reasons they are not doing so include not needing additional employees; worries about weak business conditions, including revenues; cash flow; and the overall U.S. economy. Additionally, nearly half of small-business owners point to potential healthcare costs (48%) and government regulations (46%) as reasons. One in four are not hiring because they worry they may not be in business in 12 months." (Gallup: 85% of small businesses not hiring, Gallup Poll, 2/15/2012)
"Thirty-four (34) percent of owners (or 72 percent of those trying to hire or hiring) reported few or no qualified applicants for positions. While firms have eased lay-offs, they haven't resumed strong hiring." (Survey: "Small-Business Optimism Gains Two Points in April: Increase Only Returns the Index to Reading from February 2011," NFIB, 5/8/2012)
"[In May], over 2,600 respondents were polled on the topic of hiring and employment. A key finding was that 67% of business owners do not plan on hiring in the next 6 to 12 months. Additionally, 58% of business owners do not hire recent graduates." ("SB Authority Market Sentiment Survey," Forbes, 5/3/2012)
At 9.4%, North Carolina has the 4th Worst Unemployment Rate in the Country
(Bureau of Labor Statistics, Accessed 5/22/2012)

Slight improvements in recent data notwithstanding, North Carolina is not yet back on track. We continue to have one of the weakest economies in the nation. (John Hood, "Is NC Back on Track?" Carolina Journal, 5/21/2012)
NC Must Make It Easier for Businesses to Create Jobs
"The solution to high unemployment is more jobs, and the way to get more jobs is to make it easier for business owners and entrepreneurs to create them." (Joseph Coletti, "N.C. employment woes reflect concerns about high business costs," John Locke Foundation, 3/10/2010)

According to a 2012 Report, Less Employers in North Carolina
"According to the U.S. Census's Longitudinal Business Database, over 24,000 North Carolina establishments closed up shop in 2009 -- 12% more than in any single year in the state's history. Not only that, the number of new establishments declined 11% from the previous year as well. As a measurement of all employer businesses (including start-ups), NC had 6,755 fewer firms in 2009 than it did in 2008 -- a 4.3% decline that ranked 43rd lowest among the

50 states." ("2012 State of Small Business and Entrepreneurship," U.S. Small Business Administration, 2012)

Entrepreneurship in North Carolina is Down
"Not only has the number of new employer businesses declined, but so have sole proprietorships. Only three times in the past four decades has the total number of non-farm proprietors in North Carolina decreased from the previous year -- twice in the early 1970s and again in 2008." ("2012 State of Small Business and Entrepreneurship," U.S. Small Business Administration, 2012)

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