NC Budget and Tax Center

North Carolina is a cautionary tale for tax cuts, new series shows

New evidence shows that North Carolina’s economy fell behind other states in the Southeast after cutting taxes, while locking in harmful cuts for schools and widening racial inequalities in the state.

A billion dollar shortfall looms in 2020.

These are the main points of a new blog series released today from the Center on Budget and Policy Priorities (CBPP).

  • Tax cuts haven’t caused economy to surge: The CBPP analysis shows that in the years before the tax cuts, which cost the state $3.5 billion annually, took effect in 2014, North Carolina’s economy generally grew faster than the national economy and in line with neighboring states, even though North Carolina had easily the highest personal income tax rates in the region and much higher rates than it has today. Since the tax cuts took effect, North Carolina has lagged behind the overall region’s growth in jobs and GDP.
  • Thanks to tax cuts, large budget shortfalls loom in NC: North Carolina is harming its future by weakening its education system and other public investments that underlie economic vitality in the long run. Over the past decade, North Carolina has cut per-student funding for K-12 schools and higher education by 7.9 percent and 15.9 percent, respectively, after adjusting for inflation.  The tax cuts make it nearly impossible for North Carolina to restore these education cuts, let alone make new investments — such as expanding high-quality preschool — that would better position the state for the coming decades.
  • NC’s tax cuts reinforce racial barriers: This shift has added to the barriers faced by African-Americans, Latinos, and Native Americans trying to get ahead in today’s economy at a time when states should be working deliberately to undo them. More than three-fourths of the net tax cuts since 2013 have gone to the top 1 percent of taxpayers.  And because the tax cuts were so lopsided in favor of the highest income North Carolinians, black and Latino North Carolinians now pay a larger share of state taxes, while white people pay a smaller share.

Read more

NC Budget and Tax Center

What should be in tonight’s State of the Union speech

A lot of media outlets are speculating on what President Trump will likely talk about in his State of the Union address tonight as he lays out his agenda for the coming year.

Here are some of the things that President Trump should be emphasizing in his remarks, given the ongoing challenges our country faces in creating good, quality jobs for everyone, building inclusive and thriving communities everywhere, and ensuring that everyone — no matter where they live or who they are — can secure a better future for themselves and their family.

There may be a long way for our country to go to achieve these goals, but we know what works — and what doesn’t — to build a more perfect union.

Invest in our communities and our people. We already have the tools to build an economic recovery that is inclusive and addresses inequalities in North Carolina, leading to a stronger economy for the whole state and a higher quality of life for us all. Our leaders need to prioritize investing in our communities and our people, rather than giving handouts to the wealthy and profitable corporations. That means committing to ensure that every person can put food on the table and a roof over their head. That every child can have the early childhood experiences that get them ready for Kindergarten and educational experiences that lay the foundation and enthusiasm for lifelong learning. That every community has the infrastructure and tools to create opportunities.

Create good jobs that pay a living wage for all Americans. This should be a top priority for any president, but it is especially important when job growth is stalling and income gaps continue to grow. The latest numbers show that job growth fell in North Carolina and the United States last year, and we’re still not even back to where we were before the Great Recession. In fact, this is the slowest recovery in a generation. It gets even worse when you realize that most of the positive job growth in North Carolina was concentrated in the metro areas – many of our rural counties experienced a loss of jobs last year. Not to mention that the unemployment rate for Black workers is still 2.3 times higher than that for white workers in North Carolina. We need to do more to address the structural barriers to employment for workers of color, such as geographic distance to jobs, discrimination in hiring, and the lack of affordable job training in growing industries.

It’s been 10 years since the Great Recession, and the barriers to prosperity remain for many of North Carolinians. We’ve seen that much of the income growth was concentrated at the top in North Carolina last year – while the bottom 30 percent of North Carolinians have actually seen their wages fall on average. We also continue to see a wage disparity for women, especially women of color. While women overall receive 86 cents for every dollar their male counterparts make, Black women make only 64 cents and Latina women receive only 48 cents on the dollar.

Build inclusive, thriving communities.  Where someone is born shouldn’t determine what is possible in their lifetimes. Yet, for too many Americans, economic mobility is limited by existing barriers. Rather than build more barriers (and walls), it is time for American leadership to recognize the ways that our past has created many barriers for people of color and recognize that the path forward is not to erect more, but to tear down the ones that persist.

NC Budget and Tax Center

Statement on the House tax bill from the Director of the Budget & Tax Center

Statement on the House tax bill from Alexandra Sirota, the Director of the Budget & Tax Center, a project of the NC Justice Center:

“In North Carolina, we have seen how this approach to tax cuts plays out. Some people end up paying more, and everyone loses from diminished investment in their community and an economy that fails to get a boost. Federal pursuit of yet another failed tax-cut experiment will make our state challenges even worse by shifting costs to our state and leading to cuts in services. Our federal delegation should step up in this process, urging careful debate of any tax plan and rejection of one that grows the deficit, gives massive tax breaks to the wealthy and forces cuts to programs that build a pathway to the middle class for millions of Americans.”

Click here for more information about the impact of the proposed federal tax changes. 

immigration, NC Budget and Tax Center

Three scary policy ideas that we are fighting this Halloween

This Halloween there are a lot of scary policy ideas out there that keep coming back from the dead.

Some policymakers at both the state and federal level have been so relentless in their pursuit of policies that will hurt people and communities across our state that they want to change the very rules that govern us.

We plan to match that zombie-like commitment to failed ideas with timely analysis, relentless mobilization, and alternatives that will work for our state. Because cutting off opportunity from people and erecting more barriers will take us further away from building a state where every community has the tools to deliver a high quality of life and every North Carolinian can connect to opportunity.

North Carolina needs policies that won’t set us on a path to a terrifying future. That is why this Halloween we are continuing to fight back with sound, timely analysis, and the mobilization of voters across North Carolina to show the terrifying future our policymakers seek to create is not the right way forward for our state.

Here are just three scary policy ideas that we are fighting this Halloween: Read more

NC Budget and Tax Center

Do our choices match our values, as a state and as a nation? A July 4 rumination

Our country was born 241 years ago, when our Founding Fathers adopted the Declaration of Independence. The story that we tell ourselves, of our birth and who we are as a country, has been a continuous thread since then – the story of the American Dream. We tell ourselves that, in our country, there is equal opportunity for everyone – no matter where they are born or who they are. We tell ourselves that we have long been a country that is welcoming to everyone. That we are many states united, where the fate of each person is intertwined with the fate of all of us – that we value loyalty, to our neighbors and to our country.

That’s the story we tell ourselves. But then there’s the reality of the choices we make, of how things are – and how things could be if our choices actually reflected our values as a country.

If we made choices as a state and as a country that were in line with the values of the American Dream, every worker would make a living wage and the discrimination that drives differences in wages for women and men, Blacks and whites would be addressed.  Black women wouldn’t have to work hard to make only 68 cents for every dollar that white men make. Read more