With the Senate Finance Committee slated to approve another round of business tax cuts that will overwhelmingly benefit large, high net worth corporations, we’re sure to be treated to another round of economic myth-making. Proponents consistently promise cutting taxes will supercharge North Carolina’s economy but, years into the experiment, there’s still no evidence to support their bold predictions.
North Carolina’s economic track record over the last several years has been remarkably unremarkable, particularly when compared to our neighbors in the southeast. Job growth has roughly followed the national trend, and has actually been slower than some nearby state where taxes have remained steady over the last several years. Total non-farm employment in North Carolina has expanded by 10.9% since January of 2014 when the first round of tax cuts took effect, which falls shy of the 12.8% growth for Georgia, 12.6% expansion for South Carolina, and the regional average of 11.4% for the South Atlantic.
The story is even less encouraging when one looks beyond overall job growth and focuses on two industries that have been particularly vital to North Carolina’s economic prospects.
First, “professional and business services” has emerged as one of the most important sources of good-paying jobs, particularly in areas like the Research Triangle Park and Charlotte. While the sector has grown substantially in the last few years, North Carolina’s 14.7% growth since January 2014 has been well off the pace set by Georgia (17.4%) and South Carolina (18.0%).
Second, and even more distressingly for a state with a proud legacy of making things, manufacturing job growth in North Carolina since January 2014 has been roughly one half of what it has been in the two states to our immediate south. Given how reliant much of North Carolina is on manufacturing jobs, this lack of robust growth is particularly worrisome for many communities where few other industries offer comparable employment opportunities.
In spite of this evidence that tax cuts have failed to boost North Carolina’s economy, a virtually identical set of additional cuts was included in the House budget. It up to North Carolinians to demand less myth and more economic meat.
Dr. Patrick McHugh is a Senior Policy Analyst at the N.C. Budget & Tax Center.