Michael Leachman, one of the top fiscal wonks at the D.C.-based Center on Budget and Policy Priorities authored a very compelling post yesterday that makes clear why cutting (or, God forbid, eliminating) the state income tax is not the right path for North Carolina.
“A number of states, including Arkansas, Kansas, Missouri, North Carolina, Ohio, and Wisconsin, are considering deep cuts in personal income taxes to spur economic growth. But both recent history and empirical studies suggest that this approach doesn’t work particularly well, as our new report explains.
First, let’s look at recent history. Of the six states that cut income taxes sharply between 2000 and 2007 (when the recession hit), three grew more slowly than the rest of the country in the years that followed. The other three saw above-average growth, but they are major oil-producing states (Louisiana, New Mexico, and Oklahoma) that benefitted from a sharp rise in oil prices. Read More