In 2015, many conservative state lawmakers across the country are retreating from the long-held belief that cutting taxes will generate more revenue and spur economic growth. Kansas, Wisconsin, and, yes, North Carolina along with Arthur Laffer, in their efforts to put into practice the flawed theories of trickle-down economics, have created more problems than improvements, according to a recent Politico piece.
Rather than serve as a beacon of competitiveness in the South, North Carolina instead has become a cautionary tale for other states across the country that are considering tax cuts.
The evidence is mounting that tax-cutting experiments aren’t delivering on the promises made by trickle-down economic theory.
- In neighboring Georgia, a top state leader commenting on potential tax reform acknowledges that the experience of North Carolina and other states that have pursued tax reform has not been painless and that there are trade-offs. A recent piece in the Atlantic magazine highlights the harm that many local counties across Georgia face due to tax cuts passed in recent years.
- In Wisconsin, tax cuts signed into law by Governor Scott Walker have ushered in a period of ongoing budget deficits. As one writer points out, the anticipated budget shortfall of $2.2 billion is roughly half of the shortfall that resulted from the Great Recession, and it is one that was created by tax cuts.
- In Nebraska, a report on tax reform by the staff of the legislative committee on revenue charged with reviewing the prospects for tax reform highlights North Carolina’s challenges with predicting the cost of tax changes and the potential for serious revenue issues from radical changes to the income tax.
- A GOP tax writer in Missouri acknowledged that Kansas did too much too fast regarding tax cuts and noted that Missouri would not follow Kansas’ path. Indiana and Ohio leaders have publicly echoed the same sentiments.