In North Carolina, a singular focus on comparing the state’s income tax rates to other states was used to justify massive rate reductions in the 2013 tax plan.  But do tax rates determine whether a state is competitive?

It turns out that income tax rates do not indicate competitiveness of a state’s tax code for two reasons:

  1. The vast majority of people and business make decisions based on other factors
  2. Tax credits and deductions mean that few pay the full income tax rate. Read More

The last weekend before Tax Day is here and in the last minute rush to get your returns in, it can be helpful to reflect on why taxes matter.  Taxes are as some have said “the price we pay for civilized society” and more simply the way in which we invest together in building a stronger state through the creation of opportunity and establishment of a basic quality of life for all North Carolinians.

In the aftermath of the disastrous tax plan that passed last year, just how taxes play a role in our everyday lives has become clearer.  Taxes make it possible for our children to have a quality classroom experience, taxes fund monitoring and inspection that protect the quality of our water, taxes build the infrastructure that connect workers to jobs and support business in job creation.  And yet, the tax plan has created a self-imposed budget crisis that will undermine our ability to invest in these foundations of a strong economy.

Beyond that fundamental role of funding core public services, who pays under the tax code matters too.  And the tax plan passed last year makes an already upside down even worse: low- and middle-income taxpayers pay more as a share of their income than wealthy taxpayers.  This not only hurts families who are trying to make ends meet on falling or stagnating wages, it compromises the long term ability of the tax system to fund public services since it taxes where the income growth is not occurring, which creates a gap as needs increases but revenue can’t keep up. Read More

Earlier this week the Budget & Tax Center released an analysis of the economic and fiscal impacts of providing all drivers a license regardless of immigration status.  The findings suggest that more than 250,000 undocumented immigrants could be eligible for a license and their children too.  The net fiscal impact of issuing these licenses would be minimal, based on experiences in other states, and estimated revenue from fees could likely cover the cost of providing the licenses completely.

For years, North Carolina has been at the forefront of adopting measures that improve safety on the roads, from graduated driver’s licenses for first-time drivers to texting bans to strict requirements on the transportation of children. But one simple measure has been ignored: ensuring all drivers have a driver’s license, regardless of their immigration status.  In fact, since 2006, North Carolina has adopted more stringent identification requirements that effectively banned undocumented immigrants and others from obtaining a license.  This movement is in the opposite direction of the now 12 states that have expanded access to driver’s licenses recognizing the public safety benefits to having all drivers tested and insured.

Beyond providing greater assurance for all drivers that those on the road are tested, licensed and insured, driver’s licenses provide an important ability for workers to get to their jobs particularly as car travel is the dominant mode of transportation in North Carolina.  This increased mobility will likely lead to greater consumer spending, a more reliable workforce for employers, and a net benefit to the economy.

Yesterday, the Budget & Tax Center released a report on the number of North Carolinians who would have been working or seeking work if the Great Recession had never happened and job opportunities had remained strong over the last five years.  The report highlights using this new measure the troubling trend of too few jobs and workers leaving the labor force.  In addition, it pulls together compelling national research finding that most or all of the labor force decline is driven by a weak labor market.  Among the key findings:

  • 250,000 North Carolinians are missing from the labor force
  • If those missing workers were counted as unemployed, the unemployment rate would be nearly double the official rate for February 2014.

The report comes as national economists gathered this week to push for a full employment agenda, one that would seek to expand job opportunities and bring more folks into the labor market to support a stronger economic growth trajectory.  As attention nationally turns to the issue of persistent joblessness and the harm it is creating for workers and the economy, it is important for North Carolina’s policymakers to focus on good quality job creation and policies that support strong connections to the labor force for workers in a weak labor market.

This morning the Center on Budget and Policy Priorities in collaboration with leaders in the field of economics launched a push for a full employment agenda in America.  At the current moment when five years into the recovery there are still too few jobs for those who want to work, this effort couldn’t be more critical for the country and our own state of North Carolina.

So what would it mean to set as a goal full employment?  Full employment is generally described as the situation where the number of people seeking jobs and the number of employers seeking workers is closely matched.  The traditional trade-off economists focus on in discussions of full employment is the negative relationship with inflation.  But in practice, it is difficult to accurately pin down a level of unemployment that leads to rising inflation and there are tools available to allow the Federal Reserve to address inflation if it begins to tick up.

The benefits of full employment are too great to ignore.  A tight labor market pushes for more equitable distribution of growth, improves the connection to the labor market of workers and improves career trajectories.  Full employment is also connected to higher hourly wages and more work hours which is especially important as involuntary part-time work has grown.  It also has been demonstrated to improve fiscal accounts as revenues increase and expenditures on some safety net programs decline.

A full employment agenda requires federal and state policy action.  Among the policies that will be explored during today’s symposium are:

  • Stimulative fiscal policy
  • Lowering the trade deficit
  • Direct job creation
  • Worksharing
  • Manufacturing jobs
  • Apprenticeships and On-the-Job Training
  • Job quality

These concrete ideas for our economy, based in the best available evidence, provide an important re-orientation at a time when we are all seeking to improve the opportunities for working North Carolinians and Americans and grow our economy better into the future.

You can watch the launch of this event live here.