NC Budget and Tax Center

With the sounds of Small Business Saturday in the air, it’s a good time to take stock of how main street businesses in North Carolina have fared over the last several years. The end of the Great Recession certainly improved the prospects for small businesses, but the recovery here in North Carolina has had a decidedly big-business bent. Most small businesses have not seen the level of growth that their larger competitors have enjoyed during the recovery, a clear sign that we have not done enough to help Main Street to prosper.

Small Business Saturday Blog Post - NC Growth by Firm Size 2009-2015

As can be seen to the left, the fastest growth in employment during the recovery has occurred in larger businesses. The biggest businesses (more than 1000 employees) have expanded their collective workforce by more than 15% since 2009, the next largest set of establishments (between 500 and 1000 workers) by almost 12%. In contrast the smallest businesses in North Carolina have struggled to take advantage of the current period of prolonged economic growth.

The growth gap between larger and smaller businesses that we’ve seen in North Carolina has not happened to the same degree in many other states. Large firms have added jobs faster than smaller companies over the last six years nationwide, but the difference in North Carolina is much more pronounced. Growth for the largest US companies was twice that of the smallest, while here in North Carolina the largest companies lapped the smallest group five times.Small Business Saturday Blog Post - NC and US Growth by Firm Size 2009-2015

This imbalance is an economic problem because small businesses are the veins circulating capital through local economies. Owners with roots in a community often source more locally, spend more of their earnings nearby, pay better, and invest in their communities. All of that helps to keep money flowing around and creating jobs. None of this is to denigrate how many large companies can help communities, but when local businesses don’t prosper, growth doesn’t always translate into deeper economic health.

Recent economic results call for a different approach to supporting small businesses. Instead of continuing to focus on cutting the corporate income tax, which mostly helps big companies, we should be plowing more resources into programs that help small businesses get loans, find new customers, and retrain their workers. The General Assembly did take a few steps in the right direction this last session, like appropriating funds to The Support Center which makes loans to small companies. But, particularly compared to the tax breaks lavished on large companies over the last few years, the assistance provided to small businesses has not been up to scratch.

So when you hit the shopping trail this season, head to your local small businesses first, particularly if they pay their workers well, offer benefits, and are invested in your community. Big box stores have their place, and some are good corporate citizens, but it’s the small businesses in North Carolina that could use a boost.


In case you missed it, the good folks at the N.C. Budget and Tax Center have prepared a nice contribution for your Thanksgiving potluck — a series of talking points to help you converse with your less-well-informed dinner companions. Enjoy!

Here are some key facts to throw out there as you pass the gravy boat and say “yes, please” to a second – or third – piece of pecan pie.

WHEN THEY SAY: “We need to attract more businesses to relocate here if we want North Carolina to grow. Cutting taxes, regulations, and unemployment insurance and not expanding Medicaid is the best way to do that.”

YOU SAY: First of all, it’s really people like you and me, consumers, who create jobs. Businesses hire when they see a demand for their products, so job creation really starts with making sure we earn a good living and feel secure enough to spend.

Even if we’re talking about where large companies choose to invest, state taxes just aren’t that big of a deal. You have to turn a profit before you pay taxes, so that’s what companies are thinking about first and foremost. Most companies look for educated workers, a good transportation system, and a place that their employees want to live before they think about taxes.

If North Carolina is going to do better, we need to focus on policies that will make everyone feel more economically secure.

WANT TO READ MORE? BTC Policy Basic: The Reality of Tax Cuts

WHEN THEY SAY: “The Carolina Comeback is real! Clearly these policies are working.”

YOU SAY: (Stage directions optional): The Carolina Comeback sounds nice but it’s not the reality for most North Carolinians and communities in our state.

First off, it’s a U.S. comeback, nothing special to North Carolina. We went into the recession as a country, and the recovery has happened nationwide. Read More


The state legislature has set aside $8 million to defend lawsuits challenging the litany of controversial laws passed by the Republican majority in recent years, according to the Associated Press.

The litigation list is long and includes several state and federal actions seeking a rejection of voting maps adopted in 2011 and a reversal of voting law changes enacted in 2013, as well as challenges to the state’s same-sex marriage ban, the private school voucher program and the “Choose Life” license plate offering.

Funds for litigation costs go to private counsel retained to represent state officials in court, typically the job of the Attorney General. In some instances though, Attorney General Roy Cooper has declined to represent the state in cases which his office has determined are indefensible.  For example, after the 4th U.S. Circuit Court of Appeals in Richmond ruled that a Virginia gay marriage ban violated the U.S. Constitution, Cooper stated that his office would no longer defend the similar North Carolina ban in court. It was time to stop fighting court battles the state could not win, he said at the time.

In other instances, Republican lawmakers have retained private counsel even while Cooper was likewise defending the state, voicing concerns that he wouldn’t adequately represent their interests.

The primary beneficiary of the General Assembly’s largess has been the Raleigh office of Ogletree Deakins Nash Smoak & Stewart, with attorneys from that firm representing state officials in several lawsuits, including the voting rights and redistricting cases. That’s the same firm that also advised Republican leaders during the drafting of the 2011 redistricting plan.

Outside bills since summer 2014 alone exceeded $3 million, according to the AP — $2.9 million of that incurred by Ogletree Deakins to defend the voting rights cases.

Those cases are far from over, as dispositive rulings from the federal district courts remain pending and appeals to the Fourth Circuit and the U.S. Supreme Court are likely to follow. The same is true for the redistricting cases in state and federal courts, and new lawsuits challenging other controversial laws are on the horizon.

As the AP points out, a challenge to the state’s “magistrate recusal” law, which allows magistrates to opt out of performing marriages based upon a “sincerely held religious objection” to gay marriage, could be filed in the coming months.

According to Roy Cooper’s office,  the Attorney General has defended state laws in at least 15 cases and didn’t need the help of costly outside counsel.

“Our office hasn’t requested that the General Assembly hire any of the private lawyers they’ve been paying, and we think it’s a waste of taxpayer dollars to pay outside lawyers to do the work we’re already doing,” Cooper’s spokesperson Noelle Talley said in a statement.


Sen. Phil Berger

Sen. Phil Berger

One would have thought it tough to top the shameless pandering that Gov. Pat McCrory has engaged in in recent days over the issue of the rights of transgender people. As is explained in this morning’s edition of the Weekly Briefing, McCrory plumbed new depths this week with his embarrassing effort to limit the rights of a Virginia boy trying to live as who he is.

The Governor even went so far as to issue a statement in which he essentially said that transgender people do not exist, but are merely people of one gender masquerading as people of the other.

Now, however, comes word that it may be possible to outdo McCrory. Yesterday, Senate President Pro Tem Phil Berger issued a statement attacking Attorney General Roy Cooper for not joining McCrory’s pro-discrimination effort. Berger even issued the following through-the-looking-glass tweet:

“Shame on AG for Putting Politics Above Student Safety”

You got that?! Berger is attacking Cooper for playing politics. This is like Vladimir Putin accusing the people of Crimea of aggression against Russia.

The bottom line: If not joining a lawsuit designed to deny basic human rights to a mild mannered 16 year old boy is “playing politics,” North Carolina could use a whole lot more a such “play” and a whole lot less of whatever it is that Berger is shoveling.

NC Budget and Tax Center

New research out the Carsey School of Public Policy at the University of New Hampshire shows the powerful anti-poverty effect of the federal Earned Income Tax Credit in states.  North Carolina, it turns out, has seen one of the greatest shares of its population benefit from this policy in the country.

A full 3 percent of the overall population would have been poor in North Carolina were it not for the federal EITC. Such a growth in poverty would have further held back the economy from reaching its full potential as working families struggle to maintain spending and make investments in their careers and families that can boost the economy.

The boost to the economy from the economy occurs in the short- and long-term.  Children in families that receive the EITC also are more likely to do better in school and have increased lifetime earnings.

Here are some of the key findings from the report for North Carolina: Read More