NC Budget and Tax Center

The findings keep pouring in: North Carolina won’t grow as strong or resilient an economy without taking a careful look at how it ensures everyone is included and connected to opportunity. Proven public policies and investments are needed to ensure that prosperity is broadly shared and everyone benefits from growth.

It is clear that there is a long way to go. In a recent report by my colleague Tazra Mitchell on economic hardship in the state, more than 464,000 North Carolinians would need a stronger pathway out of poverty to make the poverty rates for communities of color equal to that of whites. Analysis by the Brooking Institution recently found that proximity to jobs for people of color and poor people fell more steeply than for non-poor and white residents since 2000. In North Carolina, four of the five metro areas profiled in the report saw no improvement or a worsening of job proximity for residents of neighborhoods that were majority people of color. Not only has the distance to jobs grown, despite the recovery that began in 2009, there remain are still too few jobs for the North Carolinians who want to work and the jobs that are available increasingly pay low- or poverty-wages.

New research published in the Urban Studies journal finds that equity is a powerful force in sustaining job growth. Over more than 180 metro regions, the authors find that growth spells– measured by employment increases over three or more years–are longer if the region has lower income inequality and is more spatially integrated.

Raleigh and the Triangle region are becoming an important case study in how to pursue equitable growth. If done right here, the region could provide important insights for other areas of the state, region and country. Even as employment growth in the state has been concentrated in Raleigh’s metro area (as well as Charlotte), the region’s full potential has yet to be realized as it continues to grow at less than half of it’s pre-recession rate.

In an analysis released last week by the Triangle J Council of Governments, PolicyLink and PERE USC,it is clear that demographic shifts and economic realities require the Triangle region including Raleigh, Durham and the surrounding 13 county area to embrace equitable development strategies. Read More

NC Budget and Tax Center, Raising the Bar 2015

North Carolina can have quality schools, accessible health care, a sound transportation system, affordable housing and safe neighborhoods—all of the things necessary to strengthen the economy and grow a strong middle class. We just have to make the choice to build this infrastructure of opportunity.

In recent years, state policymakers have undercut the effectiveness of our public systems, instead enacting tax cuts that primarily benefit the wealthiest taxpayers and profitable corporations. Because of those tax cuts and a slow economic recovery, the state doesn’t have enough revenue to adequately support the systems that fuel economic growth.

That’s not how it worked in the past. Coming out of previous recessions, North Carolina quickly reversed the cuts made when times were tight and increased investments in roads, schools, and universities that paved the way for an economy that outpaced many other Southern states.

North Carolina has never looked to other states to show us the way forward. On the contrary, other states in the south have always looked to us for leadership and innovative ideas. Our state created a progressive personal income tax in 1921 that made us a leader in state funding for public education at one the time and further established our reputation as the Great Roads State. We created a community college system that was the envy of the nation. And, more recently, our innovative early childhood programs were held up as a national model.

Today, instead of making investments, policymakers are using the tax system and the state budget to bulldoze the infrastructure of opportunity.

As state leaders create the Fiscal Year 2015-2017 biennial budget, we can encourage them to make investments that are proven to grow our economy and promote financial stability for families and the state government. But we have to acknowledge that they can’t make those investments without the necessary revenue.

Over the next few weeks, experts on a range of issues that support stronger communities, families and economies in North Carolina will share their perspectives here. They will speak not just on where state investments have been and what has been lost in recent years, but they will also share proposed solutions for what North Carolina’s leaders could do to achieve the better outcomes we all seek.

We hope that our leaders will consider how we raise the bar in the budget debate not how we race our neighbors to the bottom.

Editor’s note: This is an installment in “Raising the Bar” — a new series of essays and blog posts authored by North Carolina nonprofit leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved.


NC Budget and Tax Center

For Throwback Thursday, the Senate is relishing in old school ideas.

Case in point, a bill was filed today to further cut income taxes for profitable corporations and continue to reduce the flat income tax rate that benefited the wealthiest taxpayers the first time around. It is an eerily similar approach as the legislation passed in 2013, which is now hurting our state and economy.

Income tax cuts like the one proposed in today’s throwback are not the answer to the state’s economic challenges. Just ask Senator Brown who is working to secure additional sales tax revenue for rural counties that have been hit hard by the 2013 tax changes which ultimately reduced state investments in public schools and economic development. Take a look at the academic research which finds no consensus on tax cuts benefiting the economy through job creation or increased incomes. Or consider the experiences of states’ like Kansas where income tax cuts have not delivered a boost in jobs or wages but have resulted in cuts to core services.

The continued pursuit of income tax cuts will not boost North Carolina’s economy, it only serves to further reduce revenue that pays for services that people rely on each day, like our schools.  Preliminary estimates suggest the cost of this bill would be $1 billion, on top of the nearly $1 billion price tag of the tax changes passed in 2013.

One major beneficiary of these tax cuts will be profitable corporations.  Read More

NC Budget and Tax Center

After several states including North Carolina challenged the extension of Deferred Action for Childhood Arrivals and the Deferred Action for Parents of Americans a preliminary injunction was issued holding up implementation of these immigration directives with the potential to reach 5 million immigrants without documents nationwide. While the issue is considered in the courts, the delay has real human, fiscal and economic costs.

As the Center for American Progress notes in their analysis:

The Council of Economic Advisers, or CEA, estimates that the November executive action providing deferred action to low-priority individuals will increase the national gross domestic product, or GDP, by nearly $60 billion over the next decade. In the aggregate, CEA estimates that the immigration directives will increase the GDP by $210 billion. As CAP demonstrated in a recent report, payroll tax revenues will increase $22.6 billion in five years and the solvency of the Social Security system will increase by $41 billion over 10 years as workers earn higher wages…State and local economies also stand to benefit immensely from the executive action.

Indeed, there are clear benefits to state and local economies to ensuring that these low-level undocumented immigrants can work and care for their families free from fear of deportation. As we have written about in the past, North Carolina is poised to benefit economically from these policies both through increased labor force participation and tax revenue. Not only are there estimated to be increases in state tax revenue but their participation in local economies as consumers is also important. That is in part why thirty-three mayors have filed an amici brief to urge the courts to lift the injunction: leaders of cities know that immigrants make an important contribution to their vibrancy. Read More

NC Budget and Tax Center

It bears repeating that the first rule of climbing out of a hole is to stop digging. But some policymakers obviously haven’t learned that lesson. They are pushing more tax cuts for those who need them least, even though revenue for schools and other priorities is coming in below projections because of tax cuts that have already gone into effect.

Last week Senator Berger laid out a tax plan that would allow profitable corporations to escape some of their responsibility for supporting the public services that benefit their businesses and the stability of the broader economy. The plan would do nothing to address the uneven recovery from the last recession, which has done nothing to boost the wages of most North Carolinians.

The senator said he will propose another round of corporate income tax cuts: reducing the rate to 3 percent from 5 percent by 2017 and changing the way profitable corporations account for their income for tax purposes. and Profitable corporations have already seen their tax rate drop from 6.9 percent, at a cost of nearly $350 million. Dropping the rate to 3 percent would mean roughly $500 million in additional revenue lost to the state’s schools, public health care and courts, to name just a few of the core public services that support opportunity for everyone in the state.

There is little hard evidence to support Senator Berger’s claim that corporate income tax cuts are a good strategy for boosting the state’s economy. Tax cuts to profitable corporations flow to shareholders and thus cannot be guaranteed to stay in the state and generate economic benefits for North Carolina. Read More