NC Budget and Tax Center

Missing Dollars Equals Missed Opportunity

The News & Observer has been running a timely, important series this week on North Carolina spending billions of dollars on tax breaks with little attention to whether they deliver the jobs and economic growth supporters claimed would result — or otherwise contribute to the common good.Tax Code Spending Updated

Because they are enacted through the tax code rather than the state budget, various tax breaks for special interests largely evade the annual scrutiny that the rest of state spending undergoes.  So each year the state loses precious resources that could have been invested in our schools, roads and bridges, and other services that people and businesses rely on and that help build a strong economy.

In recent years these tax breaks have grown faster than other areas of state spending.

Now, instead doing the real work of reforming our tax code by ending ineffective tax breaks, policymakers are pursuing new tax cuts for the wealthy and businesses that would further damage North Carolina’s ability to invest in education, transportation, and safe communities, For years, experts have agreed that ending wasteful tax breaks for special interests must be a fundamental part of reform, but lawmakers are continuing to take the opposite approach.

It is not impossible to separate the wheat from the chaff. Unproven special interest tax breaks for businesses stand in stark contrast with the Earned Income Tax Credit, for example, which has been proven to reduce poverty and increase success of poor kids as adults.  Sorting the effective from the wasteful takes time and resources, but that’s what real tax reform is, and I can’t think of a better way for our lawmakers to spend their time.

5 Comments

  1. Doug

    May 1, 2013 at 11:11 am

    How can NC be “spending” when they never collect the dollars? The fact that they are approaching the situation from the perspective that all income out there is inherently the governments and they are allowing us to keep some as our own shows that the story is inherently flawed.

  2. RJ

    May 1, 2013 at 12:35 pm

    5oug: Look up “tax expenditure”. It’s a real thing. Used by real people who study real things like budgets, which necessarily involve taxing and spending and borrowing. That’s what the article is about.

  3. Doug

    May 1, 2013 at 1:09 pm

    RJ, it is not spending….look it up, it is a real thing us accountants use to describe paying something out….not foregoing projected revenue. Believe me, I know because I spend way too much time in my day job compiling and studying budgets.

    I agree with your last bit there. At least you have your terms taxing (intakes of taxes assesed), spending (funds paid out to others), and borrowing (issuing debt). Taxing and spending are not the same thing, and foregoing taxes is not “spending”…..or really anything because the laws forbid the collection of the funds it is nothingness.

  4. RJ

    May 1, 2013 at 1:31 pm

    The mortgage interest deduction is a tax expenditure, right? Child tax credit? Personal exemptions? Accelerated depreciation for aircraft? Deduction of 50K off self-employment income?

  5. Doug

    May 1, 2013 at 6:45 pm

    RJ,
    All are tax deductions, or in some cases credits. Taxes can only be expended once they are collected. Calling taxes not collected once again assumes that the government owns all of the wealth/money generated in the economy and just lets us have some because they are being nice. Kind of like assuming you are a slave…..

    Here however is a list of tax expenditures:
    Military spending, road building, police service, fire and rescue services, welfare payments, Obamaphones, unemployment payments, abortion dr payments, Social Security payments, Barry Soetero’s salary and monthly vacations, need me to go on RJ?

    You can have fun with this yourself, think of anything the government cuts the proverbial check to and there you have an expenditure. You can even apply it to your own situation……the paycheck or whatever comes your way in funds each month are called receipts/income, the bills you pay are called expenditures. I bet you don’t make up some kind of income like “Progressive Income and Reparations Because I am Oppressed Income” and then call it an expenditure because you do not receive it do you? If so….then you are in an even more wacky universe than dave esmay.