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TaxesCatherine Rampell of the Washington Post has an excellent essay in this morning’s edition of Raleigh’s News & Observer about how the American aversion to taxes has become an irrational and destructive affliction. Not only are we leaving core public structures and services chronically underfunded, we’re skewing our entire political system by turning our public servants into scavengers who must concoct ever-more-elaborate schemes to pay for the services we demand.

“Voters hate taxes and will punish any politician who threatens to raise them (or, in many cases, does not accede to cutting them). But schools, roads, police forces, garbage collection, firefighters, jails and pensions still cost money, even when you cut them back as much as voters will tolerate. So instead of raising taxes, state and municipal governments have resorted to nickel-and-diming constituents through other kinds of piecemeal, non-tax revenue raisers, an outcome that is less transparent, and likely to worsen the economy, inequality and social injustice.

Think of recent, infuriating stories on civil asset forfeiture, in which law enforcement seizes cash and other property from people who are never charged with crimes. Often the departments that do the seizing get to keep the proceeds, which leads to terrible incentives. Officers around the country now attend workshops that offer tips on the best goodies to nab (go for flat-screen TVs, not jewelry).

Forcing cops to remit forfeiture proceeds to the state or local treasury, rather than allowing an eat-what-you-kill policy, might discourage bad behavior to some degree. But at heart, the reason such actions are so commonplace is that government revenue has to come from somewhere, if it ain’t coming from taxes.”

As Rampell goes on to point out, this ridiculous state of affairs is transforming how we fund government from a broadly-shared, democratic enterprise  into a regressive, market-distorting mess. She might’ve also mentioned that it’s helping to transform how we think about government as well. Where once all citizens were stakeholders/owners, we’re now becoming cheapskate bargain hunters looking only to get the best deals for ourselves (e.g. private school vouchers).

Her solution: “It’s time to take off the fiscal blinkers and start rewarding politicians who have the courage to advocate raising revenues the old-fashioned way: through taxes.”

Amen to that.

Commentary

ThanksgivingIf you’re preparing for the inevitable political discussions that will accompany your family get-togethers this week, here are three new Thanksgiving-themed posts that might help you out:

#1 is today’s Fitzsimon File, which highlights the hypocritical change of heart that so many conservative politicians display toward people in need around the holidays. As Chris notes, the disconnect between what the politicians say about the same needy people during the holidays and the other 11 months of the years is frequently breathtaking.

#2 is a new Q&A from the N.C. Budget and Tax Center entitled “How to talk about the economy and taxes with your family.” Here’s an example:

WHEN THEY SAY: “This state is spending more than ever on public education.”

YOU SAY: We’re funding public schools in NC nearly 6 percent less than in 2008 when you adjust for how much things cost.  This would be like the Panthers claiming a touchdown at the 6 yard line.

As the economy improves—and it is improving—we need to invest in our public schools to ensure that we educate our kids and build a sound foundation for future economic growth. Without investing more, we can’t ensure that our classrooms, teachers and students have the cutting-edge tools to improve learning.

Finally, #3 is this morning’s edition of the Weekly Briefing (“Food for thought on the immigration question”) in which several key facts are spelled out (and myths exposed) about President Obama’s executive order on immigration last week. For example: Read More

NC Budget and Tax Center

Voters in Mecklenburg, Guilford, and Rockingham counties each rejected a ballot initiative to increase its local sales tax by one-quarter cent. Under these referendums, consumers would have paid 25 cents in additional sales tax per $100 spent on goods and services subject to sales tax. The sales tax increase was expected to generate around $32 million for Mecklenburg County, $14 million for Guilford County, and $1.5 million for Rockingham County in additional local revenue each year.

This rejection of a sales tax increase highlights the tenuous reality of funding for public education in North Carolina. Last year, state lawmakers passed a tax plan that significantly reduced revenue available for public schools and other important public services. The tax plan has proven to be more costly than state policymakers’ initial estimate and the implications of this self-imposed revenue crisis will reverberate across the state in the years ahead. Meanwhile, some local governments are bracing for the revenue losses associated with the elimination of the local privilege license tax, which goes into effect next July.

Of the three counties rejecting a proposed sales tax increase, Mecklenburg County has experienced significant growth in its student population in recent years. Charlotte-Mecklenburg Schools (CMS) is the second largest, and one of the fastest growing school systems in the state. For the most recent 2013-14 school year, more than 144,000 students were enrolled in CMS, with nearly 10,000 additional students entering CMS classrooms since 2008. Guilford County has experienced modest growth in its student population (1,326 additional students) while the student population for Rockingham County has declined (990 fewer students) since 2008. Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

The 2015 state budget for creating jobs and growing the economy doubles down on the wrong turn taken by the legislature on economic issues over the last year. First it was the decision to continue to last year’s ill-advised tax cuts for the wealthy instead of investing in job training and education—the real building blocks of sustainable economic growth. Then it was the decision to privatize the business recruiting activities of the Department of Commerce—despite evidence from other states these initiatives produce more scandals than jobs—and eliminate regional planning initiatives that helped small communities coordinate their economic development efforts.

And now the state budget completes this trifecta of poor choices for economic development by spending more of our state’s limited resources on programs that are both ineffective at creating jobs and are overwhelmingly targeted to the wealthiest urban areas of the state instead of the more distressed areas in rural North Carolina.

Read More

Falling Behind in NC, NC Budget and Tax Center, Poverty and Income Data 2013, Poverty and Policy Matters

New data released by the US Census highlight the pervasiveness of poverty nationally and in North Carolina. In 2013, one in six North Carolinians lived below the federal poverty rate – less than $24,000 a year for a family of four and  $12,000 a year for an individual. For communities of color, the poverty rate is far worse: 32.5 percent for Latinos, 28.9 percent for American Indians, and 28 percent for African Americans.

These daunting poverty rates highlight that far too many individuals and families across the state face economic hardship. The persistence of poverty has been accompanied by a rise in income inequality, which poses consequential implications for the overall economy and North Carolina’s state economy. The bulk of economic gains from the ongoing economic recovery have flowed to a small group of high-income earners. In the first three years of the economic recovery, the top 1 percent of income earners captured 95 percent of the income gains nationally. Here in North Carolina, income for the top 1 percent of income earners in the state grew by 6.2 percent from 2009 to 2011 while the bottom 99 percent saw their income decline by 2.9 percent. The latest US Census data show that this early post recovery trend is likely to hold. By 2013, the top 20 percent of households in North Carolina captured more than half of all income earned by all households in the state (see graphic below). Read More