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What’s going on in Kansas? Beware North Carolina!

Posted By Cedric Johnson On March 28, 2014 @ 2:49 pm In NC Budget and Tax Center | Comments Disabled

What’s the deal in Kansas these days? That’s a question Governor McCrory and North Carolina’s state leaders should be asking themselves.

After passing huge tax cuts in recent years, the subsequent unimpressive economic performance and continued disinvestment in core public investments in Kansas serve as a cautionary tale for North Carolina.

A recently released report by the Center on Budget and Policy Priorities (CBPP) [1] highlights how Kansas’ economic performance has failed to live up to the promises made by Governor Brownback and his legislative allies. Kansas passed huge income tax cuts in 2012 that reduced annual revenue for public investments by more than $800 million for FY 2014. Proponents claimed the tax cuts would boost the state’s economy.

Last year North Carolina followed Kansas’ lead when state leaders passed and Governor McCrory signed into law a tax plan that includes huge income tax rate cuts and reduces annual revenue by more than $650 million once all tax changes take effect. Here too, the governor and proponents claimed that cutting taxes will boost North Carolina’s economy.

So how is Kansas faring these days?

Kansas hasn’t experienced anything close to an economic surge in the wake of the huge tax cuts. Massive revenue loss has meant continued state funding cuts to core public investments – public schools, colleges and universities, and healthcare services, for example. Kansas’ economy hasn’t seen the exceptional growth promised. The state added jobs more slowly than the U.S. as a whole since the tax cuts took effect, the CBPP report highlights [1]. Furthermore, average earnings for Kansans are lower in the wake of the tax cuts than prior to the tax cuts taking effect.

This is the reality for Kansas today and no credible evidence exists that suggests a dramatically different outcome for North Carolina. Tax changes in Kansas and North Carolina will largely benefit the wealthy and profitable businesses – particularly profitable multi-state corporations in North Carolina. Moreover, the tax changes in both states shift the responsibility for paying for public investments to low- and middle- income taxpayers and away from wealthy taxpayers.

North Carolina can begin making a U-Turn from its current disastrous path by not allowing the next round of income tax rate cuts included in the tax plan to go into effect for 2015. North Carolinians want an economy that promotes economic prosperity for all. Cutting taxes at the expense of public investments that serve as the foundation of economic growth does not promote an economy that works for all North Carolinians.


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URL to article: http://pulse.ncpolicywatch.org/2014/03/28/whats-going-on-in-kansas-beware-north-carolina/

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[1] recently released report by the Center on Budget and Policy Priorities (CBPP): http://www.cbpp.org/files/3-27-14sfp.pdf

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