NC Budget and Tax Center

Tax Foundation’s newest ranking leaves much to be told

We are once again hearing about North Carolina’s business climate moving toward top-ten status among states according to a new ranking by the Tax Foundation, a tax policy research organization that favors tax cuts. North Carolinians should be leery of jumping on the celebration band wagon, however.

As I’ve highlighted before (see here and here), this ranking provides no insight whatsoever regarding the actual fiscal and economic health of the Tar Heel State. Instead, the ranking simply continues to applaud more tax cuts that have largely benefited the highest income earners in the state and profitable corporations. The ranking tells us nothing about the negative impact of the more than $2 billion in annual revenue loss once all tax changes are in place. These tax cuts represent lost resources that could be used to boost investments in public schools, provide health services for the elderly and poor, and ensure that all communities across the state can thrive.

A smart business leader understands that simply being told how much revenue a business generates tells her nothing about whether the enterprise is profitable. Furthermore, a prudent business leader understands the importance of making adequate investments to ensure the long-term success of the business.

North Carolina’s move up the Tax Foundation ranking just means lawmakers have prioritized tax cuts over important public investments in things like public schools so they can offer every child a high quality education. This flawed priority may zip the state up the Tax Foundation ranking, but this supposed short-term gain poses a huge potential long-term cost.

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