For Throwback Thursday, the Senate is relishing in old school ideas.
Case in point, a bill was filed today to further cut income taxes for profitable corporations and continue to reduce the flat income tax rate that benefited the wealthiest taxpayers the first time around. It is an eerily similar approach as the legislation passed in 2013, which is now hurting our state and economy.
Income tax cuts like the one proposed in today’s throwback are not the answer to the state’s economic challenges. Just ask Senator Brown who is working to secure additional sales tax revenue for rural counties that have been hit hard by the 2013 tax changes which ultimately reduced state investments in public schools and economic development. Take a look at the academic research which finds no consensus on tax cuts benefiting the economy through job creation or increased incomes. Or consider the experiences of states’ like Kansas where income tax cuts have not delivered a boost in jobs or wages but have resulted in cuts to core services.
The continued pursuit of income tax cuts will not boost North Carolina’s economy, it only serves to further reduce revenue that pays for services that people rely on each day, like our schools. Preliminary estimates suggest the cost of this bill would be $1 billion, on top of the nearly $1 billion price tag of the tax changes passed in 2013.
One major beneficiary of these tax cuts will be profitable corporations. Profitable corporations benefiting from the rate reductions and adoption of Single Sales Factor aren’t likely to invest those dollars back to North Carolinians and therefore are unlikely to generate jobs in the state.
To truly be competitive in our region and our nation, North Carolina shouldn’t look back to the failed ideology of trickle-down economics. We should instead focus on the proven track record of smart public investments that support and grow the economy. This won’t happen as long as our leaders remain fixated on old throwback ideas.
This blog post was revised on 3/28/2015 from its originally posted version to reflect emerging analysis of the Senate tax cut plan.