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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

Commentary

The Greenville Daily Reflector ran an editorial this week (which the Charlotte Observer re-ran in part of this morning) that rightfully decries the shell game played by the General Assembly this year in shifting the costs of driver’s education off on to the parents of high schoolers.

In passing the cost of driver education to parents of high school students, state lawmakers appear to be playing a shell game with the taxes North Carolina drivers have been paying for 57 years to support the program. When tax dollars earmarked for specified services no longer pay for those services, the government should not get to keep the money.

If that is what is happening in the case of a $3 charge added to license plate fees for driver education, it represents more than an injustice to taxpayers. It collides head-on with the conservative ideology espoused by the majority leadership in Raleigh….

What is not debatable is that for nearly 60 years tax dollars have been flowing from the pockets of every North Carolina motorist to pay for driver education. To remove the service with no relief to those paying for it — and requiring others to pay again — amounts to something akin to highway robbery.

Not what we should expect from a GOP-led Legislature that professes a desire to shrink government’s reach into our personal lives.

What the piece should have noted, of course, is that rather than being some kind of aberration, “fee for service” government is the right’s favored model these days, while the notion of broadly applicable, fairly distributed taxes are quickly becoming a thing of the past.

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"Healthywealthy" by threestooges.net. Licensed under Fair use of copyrighted material in the context of Healthy, Wealthy and Dumb via Wikipedia - http://en.wikipedia.org/wiki/File:Healthywealthy.jpg#mediaviewer/File:Healthywealthy.jpg

“Healthywealthy” by threestooges.net. Licensed under Fair use of copyrighted material in the context of Healthy, Wealthy and Dumb via Wikipedia

No, this post is not an attempt to personally disparage the folks running North Carolina government. Rather it is an attempt to conjure up an image that captures the impact of the decisions that state leaders have been inflicting of late on their brethren and sistren at the local level.

As some readers will recall, The Three Stooges were an outlandish and slapstick comedy trio that had a long run in the middle part of the last century. In one of the trio’s recurring bits, one Stooge (usually Moe – pictured on the left) would slap or punch the second Stooge, who would then, in turn punch the third member of the group. The third and most hapless Stooge would then turn beside him and find that he only had thin air to punch.

Sadly, this comedy bit pretty well captures the essence of what’s going on in North Carolina government right now: Whether it’s the McCrory-Pope team or the General Assembly that starts the punching, the ones left flailing at thin air are local governments.

For the latest classic example, check out the bill under consideration in the state Senate during the waning days of the 2014 session that would hamstring local governments in their ability to raise local sales taxes for important needs. While Senators sought to alter some of the the impacts of the bill last evening, it still promises to have a deleterious impact — especially on big counties like Wake and Mecklenburg. And, of course, this comes on the heels of several previous haymakers in which state leaders have slashed state support for locals.

The bottom line is that the overarching policy of the current conservative state leadership when it comes to local government is this: We’re all for local control that’s closest to the voters — except when we’re not (i.e. any time anyone at the local level even thinks about doing something — like raising taxes to provide essential public services — with which we disagree). SLAP!!!

NC Budget and Tax Center

Jobs11-5During the debate over last year’s billion-dollar-a-year tax cut plan, supporters made a lot of big promises about the supposed economic benefits of cutting corporate and personal income taxes for wealthy individuals and highly profitable corporations. The problem—as many warned at the time—is that tax cuts almost never live up to their promises.

And that’s the point made in a recent piece by the well-respected Fiscal Times. In order for the tax proponents’ claims to be true, North Carolina would have needed to generate job growth that is significantly better than other states and the national average. According to the Fiscal Times:

The trouble is that the promised job growth hasn’t really materialized.

To be sure, with the U.S. economy as a whole adding jobs at a pace of 250,000 per month, there aren’t many states seeing a downturn in employment anymore. But the promises that went along with the tax cuts and reduced spending weren’t about keeping up with the rest of the country, but about surging ahead.

The Fiscal Times examined the job creation record of North Carolina and two other states that have experimented with deep tax cuts—Kansas and Wisconsin—and found that:

The dramatic tax cutting doesn’t appear to have done nearly as much for job growth as promised.

Wisconsin and Kansas, for example, have actually lagged the national average in job creation since their big tax cuts and budget cuts were enacted:

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NC Budget and Tax Center

State budget writers are currently grappling with the task of ironing out a final budget in the face of last year’s huge tax cuts that are hampering our ability to invest in the building blocks of a strong economy. As we entered into the new fiscal year without a revised budget, the News and Observer Editorial Board called upon lawmakers to reconsider their revenue-losing, lopsided tax plan. Here’s more from their editorial that ran over the weekend:

As North Carolina lawmakers struggle to agree on the second year of the state budget, it’s becoming clear that last year’s decision to cut taxes came too early and went too far. The state compressed its three-level personal income tax rates of 6, 7 and 7.75 percent to a flat 5.8 percent and reduced the corporate tax rate from 6.5 to 6 percent.

Had the Republican-led General Assembly held off on these cuts, North Carolina would be enjoying a budget surplus now. There would be money to increase teacher pay without cutting education elsewhere. There would be money to invest in the University of North Carolina and in the state’s neglected roads, bridges and water systems. And there would be money for modest, well-targeted tax cuts.

Instead, the legislature’s Republican leaders and Republican Gov. Pat McCrory cut taxes in a way that is creating an artificial crisis. The state doesn’t have enough money to meet the needs of its growing population and can’t find a sustainable way to lift the public schools teachers’ pay that has sunk to 48th in the nation. In North Carolina, the rich are getting richer as the stock market hits all-time highs and corporations are profiting from a rising economy, but the state has forgone the tax boom that should have come with that recovery.

….

Lawmakers should take another look at taxes and find a way to generate revenues that will meet the state’s needs and support its ambitions.

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