- The Progressive Pulse - http://pulse.ncpolicywatch.org -

Editorial: Tillis is flat wrong about NC tax cuts

Raleigh’s News & Observer has an on-the-money editorial [1] this morning in which it blasts Senator Thom Tillis for promoting North Carolina’s destructive trickledown tax policies as a model for the nation. Here’s the excellent conclusion:

Broader numbers indicate that North Carolina’s “tax reform” has not, or at least not yet, stimulated the state economy. Indeed, the austerity spending the tax cuts require may have undercut growth that would have resulted from more robust state investment in infrastructure, educational systems and people.

John Quinterno, a principal with South by North Strategies, a Chapel Hill research firm specializing in economic and social policy, says Tillis’ claims ignore the reality on the ground. Household income, adjusted for inflation, is about the same as before the recession hit in 2007. Wages are not going up. The poverty rate (15.4) is improving slightly but remains 1.1 percent higher than in 2007.

Essentially, the Republican approach of cutting taxes in ways that disproportionately benefit the wealthy and large, profitable corporations has not significantly improved North Carolina’s economy from 10 years ago.

“We are having growth, but it’s nowhere near adequate to lead to improvement in quality of life and well being,” Quinterno says. “If people aren’t better off that they were 10 years ago, that is a hollow victory. It’s nothing to celebrate. It’s saying the status quo is acceptable.”

And the status quo in North Carolina is not a model for the nation. Economically, the state is being pulled apart as its urban centers grow rapidly and its rural counties remained mired in the last recession.

On Wednesday, the Budget & Tax Center, a project of the nonpartisan N.C. Justice Center, released an analysis of the state’s August labor market data that showed how uneven economic progress is across North Carolina. One telling fact: 48 of North Carolina’s 100 counties had fewer jobs in August than before the Great Recession. And even some urban counties are losing ground. Rocky Mount and Goldsboro lost jobs over the past year.

The truth is that there’s little evidence that state tax cuts can spur a state’s economy while there’s abundant evidence that a failure to invest can stymie it, as has been recently demonstrated in Kansas. In any event, the tax cuts in North Carolina have only been in effect for about three full years. It’s too soon to assess how much they’ve helped or hurt the economy. And it’s far too soon for Sen. Tillis to be telling Congress to follow North Carolina’s example in shaping tax reform.