NC edges up to 9th in economic ranking

North Carolina rose slightly — going from 10th to ninth — in the annual Tax Foundation report comparing state corporate tax costs across the country.

The study, released Thursday and covering 2024, ranks states in five primary tax categories: corporate; individual income; property; sales; and unemployment insurance.

North Carolina ranked fifth for corporate, sixth for unemployment insurance, 12th for property, 15th for individual income and 20th for sales.

North Carolina has the lowest corporate income-tax rate in the country at 2.5% for states that have such a tax.

Employers pay a tax into the state's UI system in a range of 0.06% and 5.76% based on their number of workers. Employers can pay a higher rate based on their history of job cuts and layoffs.

North Carolina has been ranked between ninth and 11th since 2017.

"The modern market is characterized by mobile capital and labor, with all types of businesses, small and large, tending to locate where they have the greatest competitive advantage," the foundation said in its news release.

"The evidence shows that states with the best tax systems will be the most competitive at attracting new businesses and most effective at generating economic and employment growth."

While the foundation acknowledges that "taxes are but one factor in business decision-making."

"Other concerns also matter, such as access to raw materials or infrastructure or a skilled labor pool.

"But, a simple, sensible tax system can positively impact business operations with regard to these resources. Changes to the tax code can quickly improve a state's business climate."

North Carolina's successful balancing act in recruiting and retaining major employers — particularly involving advanced manufacturing in the Triad — enabled the state to maintain its top ranking in several high-profile business climate analyses.

In July, CNBC listed North Carolina as its top state for business for the second consecutive year. It's only the second time a state has repeated in the CNBC rankings.

However, CNBC's coverage did not shy away from citing two divisive issues facing the state: secondary and higher education funding; and the Republican-sponsored abortion ban bill that went into effect on July 1.

In explaining North Carolina's return to the top, CNBC touted North Carolina's top-ranked workforce quality and political collaborations between Democratic Gov. Roy Cooper and Republican legislative leaders on high-level socioeconomic projects.

That includes the GOP-controlled state legislature passing a Medicaid expansion bill that is projected to benefit between 450,000 and 650,000 North Carolinians, some starting as soon as Dec. 1.

"Educated workers are flocking to the Tar Heel state, and worker training programs are among the best in the country," CNBC said. "North Carolina also boasts the third-best economy with solid growth, stable state finances and a healthy housing market.

"However, the political harmony that has helped make the state so competitive is fading. North Carolina is one of the only states with no statewide antidiscrimination protections, and it recently enacted a 12-week abortion ban, both hurting its score for life, health and inclusion."

In May, North Carolina was ranked as the nation's top state for economic and business development projects, claiming the 2023 Prosperity Cup from Site Selection magazine for the third consecutive year.

The award is shared by the Economic Development Partnership of N.C. and N.C.Commerce Department.

Criteria include: the total number of new and expanded facilities in the state; total capital investment in new and expanded facilities; total number of new jobs created; and business-climate attractiveness.

Among projects cited was Boom Supersonic with a supersonic airliner manufacturing and assembly plant at Piedmont Triad International Airport, representing a capital investment of $500 million with a pledge of 1,750 jobs.

Altogether, N.C. had 151 new projects announced during 2022 totaling 27,144 new jobs for residents and $15.58 billion in capital investments.

In January, N.C. received another No. 1 economic designation from a media outlet, this time the 2022 State of the Year from Business Facilities magazine.