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In light of Arthur Laffer’s visit to North Carolina this week, a new analysis by the Institute on Taxation and Economic Policy on the Civitas/Laffer study for our state is particularly timely. 

Their main findings are that the report:

“• Fails to control for a large range of important non-tax factors that affect state economic growth.

Confuses cause and effect by assuming that declines in personal income in 2008 were due to taxes rather than the Great Recession.

Fails to examine the impact of increased sales taxes on the economy.

Makes claims that have been previously discredited by mainstream economists and relies on misleading and cherry-picked data.

Ignores the importance of taxes in financing public investments that have a far greater positive impact on economic growth than reducing tax rates.”

Check out the report in detail here.  It adds to the mounting evidence that the Civitas/ Laffer/Senate proposal is a bad one for North Carolina, not least because its case is not supported by the rigorous research needed for undertaking such a radical overhaul of the state’s tax system.