North Carolina tax cuts may create incentives for business formation

As part of a proposed $18.9-billion budget plan, the North Carolina Senate has announced it aims to cap the tax burden on small businesses. The legislation is part of the state government’s effort to boost the local economy.

According to the Charlotte Observer, the Senate says small businesses will be treated the same as major corporations when it comes to North Carolina’s higher marginal tax rate. Companies with gross receipts of $1 million or less would benefit from reduced tax rates under the bill.

The Triangle Business Journal predicts these tax benefits will translate into $40 million worth of savings for SMBs. The proposed bill can benefit as many as 250,000 small businesses.

Additionally, it may help lure more entrepreneurs looking to create a corporation to North Carolina. The journal reports that the Senate will put $10 million toward beefing up recruitment efforts in the Department of Commerce.

It looks like the state could use the help of entrepreneurial endeavors at the current time. As of March 2010, the Bureau of Labor Statistics says North Carolina’s unemployment rate was 10.9 percent.