NC Budget and Tax Center

A new paper by UC Berkeley economist Danny Yagan provides further evidence that tax breaks that largely benefit the wealthy and profitable corporations are not a remedy for boosting the economy. In 2003, President George W. Bush passed one of the largest cuts ever to a federal capital tax rate – reducing the top tax rate on dividends to 15 percent from 38.6 percent. Using federal IRS data on corporate tax returns, Yagan compared corporations that benefited from this tax cut (C-corporations) to firms that didn’t benefit from the tax cut (S-corporations).

Corporations that got a massive dividend tax cut didn’t make any different choices about things that boost the real economy, the new paper highlights. The massive reduction to the federal dividend tax rate resulted in no meaningful change in corporate investment, net investment, or employee compensation for corporations. What did change following the huge dividend tax cut was an increase in payout to corporate shareholders. Simply put, the tax cut benefited corporate shareholders but not the overall economy.

Some lawmakers and outside groups in North Carolina are pushing to eliminate capital gains from state taxes. Governor McCrory recently announced his desire to eliminate the state’s capital gains tax for what he deems “innovation-related companies”. Either proposal to cut capital gains taxes would overwhelmingly benefit the wealthy at the expense of everyone else in the state, a recently released BTC report highlights. Proponents often claim that eliminating or reducing the capital gains tax rate will increase investment and help boost the economy. However, no apparent cause-and-effect relationship exists between changes in the top capital gains tax rate and savings, investment, or productivity growth. Instead, various analyses highlight how cutting capital gains tax rates have concentrated income at the very top. There is simply no reason to expect this reality to somehow be any different in North Carolina.

Bigger tax breaks for the rich while the state is cutting support for schools and other essential job-creation tools is not a path that promotes economic opportunity and prosperity for all North Carolinians. This new paper serves as yet more evidence that state lawmakers should reject calls to eliminate or cut capital gains taxes and instead work to make sure the wealthiest North Carolinians and profitable corporations pay their fair share.

Commentary

Loretta LynchThe U.S. Senate Judiciary Committee will commence the vetting process for Attorney General nominee Loretta Lynch this morning. This ought to be a proud moment for North Carolinians as Lynch would be the first native of our state to serve in the position. She grew up here and her immediate family still lives in the state.

Unfortunately, at this point, we don’t even know what action North Carolina’s two senators (including Senator Tillis, who serves on the Judiciary Committee) will take on the nomination. Let’s hope they do the right thing. Contact information for Tillis is available here.

Here is some additional information about Lynch and her ties to North Carolina compiled by the good folks at the NAACP Legal Defense Fund. The more you read, the more impressed you will be:

Attorney General Nominee Loretta Lynch Has Extensive Ties to North Carolina

  • Loretta Lynch, the nominee for Attorney General of the United States, is a North Carolina native whose immediate family still lives in the State. Lynch’s experiences growing up in North Carolina during the civil rights movement helped shaped her strong sense of fairness and justice on which she has relied throughout her extraordinary legal career. North Carolinians are extremely proud of her nomination and are eager to see her quickly confirmed by the U.S. Senate.
  • On November 8, President Obama nominated Loretta Lynch to be the 83nd Attorney General of the United States. President Obama described Lynch as “tough, fair and independent.” The Attorney General is considered the nation’s top law enforcement official.
  • Lynch would be the first African American woman to hold the position. Only one other African American, Eric H. Holder, Jr., and one other woman, Janet Reno, have held the office.
  • Importantly for North Carolina, Loretta Lynch would be the first North Carolina native ever to serve as Attorney General in the history of this country. Read More
NC Budget and Tax Center

A new report from the Migration Policy Institute, Lessons from the Local Level: DACA’s Implementation and Impact on Education and Training Success, finds that both educational attainment for immigrants who arrived as children and achievement of broader economic benefits resulting from their increased earnings, participation in the labor force and payment of taxes are dependent on state policy in the K-12, post-secondary and adult education arena.

State policies that support DACA youth with the financial resources, student supports and relevant training programs for career success have been effective at increasing DACA youth enrollment in post-secondary education and increased students returning to high school or GED programs.

From the report here are a few relevant findings for North Carolina: Read More

News

The UNC Board of Governors convened a summit Tuesday to discuss the future of teaching in the state, as the world of education changes rapidly and the state faces a significant drop in those who want to teach.

The education summit, a public meeting of the UNC Board of Governors held on the SAS campus in Cary and spearheaded by Ann Goodnight, looked at trends in education, as well as methods for the state to reexamine how it prepares new teachers and treats teachers once they’re in classrooms.  Chancellors and education deans across the UNC system attended as well as legislative leaders and State Board of Education members.

UNC President Tom Ross

UNC President Tom Ross

The focus Tuesday was on how to prepare and retain the state’s next generation of teachers, as the state contends with a decline of nearly 30 percent in the last four years in enrollments in the UNC system’s 15 education programs. (Click here to read more about the decline, and what it means for the state.)

“We can do better and we must do better,” UNC President Tom Ross said Tuesday in opening the day-long summit.

North Carolina’s teacher pay, even with raises passed by the legislature last year, remain below the national average, and programs that supported the professions like the N.C. Teaching Fellows scholarship program, have been eliminated by state leaders.

As part of the education summit, a subcommittee of the UNC Board of Governor released a seven-point plan Tuesday that had been in the works for a year and attempts to turn around the profession’s high turnover and declining enrollment rates at the UNC system’s education colleges. (Scroll down to read the entire plan.) Read More

Commentary

marriage amendmentAccording to news reports, Representative Paul Stam will hold some kind of legislative “briefing” tomorrow on a “religious freedom” bill that would permit magistrates and other state employees to deny same-sex couples marriage licenses if it violates their own religious beliefs.

This is an enormously troubling idea.

From a legal standpoint, permitting state employees to refuse to perform the duties of their job based on their faith opens the door to all sorts of potentially absurd new practices. There are many religions out there with many different beliefs, including some that are contrary to our state laws or policies. Are we now saying that a person’s individual, albeit sincerely-held, beliefs take precedence over the duties of their job? Can an EMT refuse to provide medical treatment to a member of the LGBT community because their lifestyle violates her religious beliefs? If a police officer, whose religion beliefs include the right of a man to discipline his wife, witnesses domestic abuse while on the job, can he choose not to arrest the husband? We’re heading down a very slippery slope with this bill.

But let’s think about this bill itself, which Stam claims is intended to defend religious freedom. The irony of this, of course, Read More