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In a recent opinion piece, the John Locke Foundation’s John Hood criticized the economic policies of North Carolina’s previous state policymakers for delivering “substandard” economic gains since the late 1990s.

As evidence, Hood cites the fact that North Carolina’s economy produced lower gains in real GDP per capita than the national economy from 1997 to 2007 (or 2010).

Hood’s analysis is correct: North Carolina’s economy did deliver lower per capita economic growth than the national average. But Hood neglects to mention which states’ economies performed better than North Carolina’s in his chosen time periods. Tennessee? Nope. South Carolina and Georgia? Not even close. Even the “Texas Miracle” didn’t match North Carolina’s economic performance from 1997 through the start of the recession.  In fact, North Carolina’s economy has delivered greater per capita gains than the southeast as a whole since 1997. (See data here.)

Even though North Carolina’s economy outperformed the average of the southeast since the late 1990s, Hood’s column implies that North Carolina’s economic policy environment did not adequately promote economic growth in recent years.

But which state economies did deliver higher per capita growth than North Carolina? Read More

Mitt Romney has achieved a seemingly unparalleled feat in the context of the 2012 presidential campaign: he’s united former governor Sarah Palin and President Obama around a common cause. Both have recently called on the former Massachusetts governor and Bain Capital co-founder to make his income tax returns available to the public.

Thus far, Mr. Romney has broken with recent precedent for presidential campaigns and refused to release his tax returns.

The recent disclosure of the executive compensation packages of another prominent private equity firm, the Carlyle Group, together with the overwhelming, broad-based public support for the “Buffett Rule,” may shed some light on Mr. Romney’s unusual decision.

Howard Gleckman of the Urban-Brookings Tax Policy Center has written how the Carlyle disclosure has revealed new information about how multi-millionaire private equity executives are able to pay a far lower tax rate than many middle class families by taking advantage of the carried-interest tax loophole (aka “the carry”): Read More

Governor Perdue is rightly touting the good news that  state revenue collections are running about $150 million above the $9.4 billion target as of the end of December.  If state collections continue the rest of the year on target, the additional $150 million surplus would be just enough to cover the state’s projected Medicaid shortfall through the end of the fiscal year.

It’s important, however, to put this small mid-year surplus* in the context of the substantial hole revenues must climb out of to reach pre-recession levels.  As the chart below shows, even if North Carolina ends each of the next two years with a $150 million revenue surplus, revenue collections will still be far below the average levels of the two decades prior to the recent recession.

To dig out of the revenue hole resulting from the economic downturn — exacerbated by recent state tax cuts — would require a revenue surplus of nearly $2.5 billion at the end of the current fiscal year and $2.9 billion next year.

 

 

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Cross-posted on Prosperity Watch

The good news from yesterday’s labor-market data release from the NC Division of Employment Security is that the state’s unemployment rate dropped dramatically from 10.4 percent in October to 10.0 percent in November.

The bad news? North Carolina still faces a jobs deficit of more than 500,000 jobs to get back to pre-recession employment levels (see chart below).

North Carolina’s jobs deficit includes the number of jobs lost since the start of the recession (295,000 jobs) plus the number of jobs needed to keep pace with the state’s population growth (214,500 jobs).

Although the monthly household survey indicated a month-over-month employment increase of nearly 13,000, the survey of business establishments showed a much smaller increase of only 3,800 jobs. In either case, the state’s economy is falling short of creating the number of jobs necessary for the state to reach pre-recession employment levels within three years (16,000 new jobs per month).

Over the past year, North Carolina’s economy has added fewer than 20,000 new jobs.

 

 

In response to this year’s push by the General Assembly to weaken the state’s safeguards against corporate tax dodging, the NC Justice Center recently launched a petition asking the General Assembly to adopt a key corporate tax reform that would nullify many of the strategies some corporations use to avoid paying state corporate income taxes.

From the petition:

But here’s the good news: there is a simple way for our policymakers in North Carolina to crack down on corporate tax dodging. All they have to do is require corporations to pay taxes on profits earned in states where they do business. This common-sense idea, called “mandatory combined reporting,” could raise up to $100 million each year in North Carolina.

In a report issued earlier this year, the NC Budget and Tax Center described how large corporations are able to take advantage of tax shelters because most of them are structured as parent corporations that each own many separate subsidiary corporations operating in many states. In states without mandatory combined reporting, multi-state corporations are able to shift income earned in one state to related corporate subsidiary in a state without a corporate income tax or with special corporate tax exemptions. Read More