North Carolina has the 10th highest poverty rate in the nation—down from 13th last year—with more than 1 in 4 of its children living below the federal poverty line. Our state also faces widespread income inequality and less economic mobility than the nation and the southeastern region. Rather than pursue a mix of tax and budget policies that boosts economic security for middle-class and low-income families, state lawmakers instead enacted a tax plan that shifts taxes away from the wealthy and towards the bottom 80 percent of taxpayers, on average.
The tax plan drains $525 million in available revenue for public investments over the next two years—a figure that balloons to at least $650 million within five years.
Consider what could have been done to help improve a child’s shot at the American Dream if state lawmakers didn’t choose to cut taxes for the wealthy and profitable corporations. Over the next two years, these dollars could have been used to provide a package of poverty-busting and mobility-lifting investments such as:
- Eliminating the waiting list for the North Caroline pre-Kindergarten program;
- Keeping and strengthening the state Earned Income Tax Credit, which helps boost the income of families who work in low-wage jobs;
- Maintaining the income tax deduction for contributions to North Carolina’s 529 college savings plans (which was eliminated in the tax plan); and
- Maintaining funding for the 10 nonprofits that promote economic development in economically lagging and distressed communities across the state – these entities include the Institute of Minority Economic Development and its Women’s Business Center
Despite lawmakers’ assertions, academic research simply lacks consensus on whether cutting taxes is an effective strategy for boosting the state’s economy and creating more jobs. However, an established and growing body of research exists that show the value of public investments, which serve as the building blocks of a strong economy and family economic security. Read More