A corporate tax cut expected to pass at the end of the General Assembly’s session surprisingly wound up on the cutting room floor.
The House Finance Committee killed a franchise tax reduction bill Wednesday, Oct. 30, even though Republicans, who hold the majority, previously supported it. The bill was complicated by an unrelated provision added by the Senate — a grant to boost the state’s film production industry.
Rep. Julia Howard, R-Davie, who presented the bill to the committee, said she voted in favor during the committee’s voice vote. She said the bill failed because several other Republican members were absent from the meeting.
But it’s unusual for a committee chairman to call a vote if he knows it’s likely to fail, noted John Locke Foundation Senior Policy Analyst Mitch Kokai. Normally, the chairman would adjourn the meeting without a vote or call a recess until objections to the bill have been addressed.
“Representative Setzer’s decision to allow the bill to fail suggests he and his House Finance Committee co-chairs weren’t particularly invested in helping this bill succeed,” Kokai said.
The bill would have cut the franchise tax a third by 2021. That’s $101.9 million after the first year, and $1.12 billion after the first five, according to a legislative staff paper, the Winston-Salem Journal reported. Republicans say cutting the tax would increase job creation and business investment. Democrats criticized the bill for its financial benefit to corporations.
The film grant would have reduced the amount of investment needed to receive a grant, making it more attractive for companies to locate production in N.C. Howard said members on both sides favor film grants. But, during committee, Howard noted the bill would make grant payments “binding” on the state and not subject to the General Assembly’s appropriation process, a proposal she found “egregious.”
“At the very least, it violates our Executive Budget Act and is certainly not in our best interest,” she said.