Budget and Tax Center Statement on the Senate’s Tax Agenda for 2013
Yesterday, Senator Berger confirmed speculation and shared more details about the Senate plan to overhaul the state’s tax code as well as his vision for establishing North Carolina’s reputation as a leader among states. The two cannot be reconciled.
In proposing to pursue elimination or significant cuts to personal and corporate income taxes, the Senate leadership is adopting the worst and most extreme policy options other states have to offer. This proposal will also compromise North Carolina’s ability to build a foundation for economic growth. Without more than half of the state’s overall revenue that these taxes provide, North Carolina will not be able to invest in educating our workforce, supporting infrastructure critical to thriving businesses, or protecting the safety and well-being of communities. And if his tax proposal were to include a shift to rely on the sales tax, as has been suggested in the Civitas/ Laffer study that serves as their template, the middle class would bear a heavy load for the investments that we all enjoy while the wealthy receive a tax break.
Certainly, North Carolina needs to rebuild after the Great Recession and the subsequent policy decisions that cut the key investments that are the foundation of a strong economy. Yet, the facts and historical evidence make clear that this is no way to effectively create the jobs the state needs or spur economic growth. Tax cuts are unlikely to encourage hiring by small businesses or change the investment decisions of wealthy households. Tax cuts will only serve to widen the income gap and undercut economic security for families and our state.
There are better policy options available to fix what is wrong with the state’s tax code, rebuild our communities, and strengthen our economy. These policies would ensure that we can build on past investments and orient our state towards the demands of the 21st century economy. North Carolina does indeed need to recommit to being an economic competitor among states, but this will require leadership that is forward-thinking and based on common-sense policies not extreme, disproven ones.