NC Budget and Tax Center

We still don’t know exactly what kind of tax and budget deal will emerge from the legislature when it wraps up business in the coming weeks, but it will likely include another round of tax cuts for large multi-state corporations. We’ve also seen an alarming push to bake further tax reductions and spending limits into the state constitution, called TABOR, which would constitutionally mandate policy that we’ve never even tested through regular legislation, and which has been a proven failure in Colorado. Against this backdrop, remember that there is no evidence that tax cuts can solve the economic challenges that we face.

Tax cuts have not improved North Carolina wages. Now that we have recovered from the worst of the Great Recession, many economists see a lack of wage growth our most pressing economic challenge. Wages in North Carolina are even more stagnate than for the US as a whole, a problem that has not been solved by tax cuts over the last few years. The average hourly wage in North Carolina is now roughly $3 less than the national average, a gap that has actually widened since the first major round of recent tax cuts passed in 2013. Tax cuts have not solved our wage problem, and there’s no reason to expect that change.

Read More


More evidence is mounting everyday that the investment-killer known as TABOR would be disastrous for North Carolina.

Now, NC Women United has compiled a tremendous list of reasons that TABOR will jeopardize the future of NC’s women and families. By imposing artificial spending limits that aren’t related to economic reality, we will miss the chance to build prosperity for everyone in North Carolina. A quick excerpt:

As you may imagine, that is a recipe for a state that will eventually fail all of its citizens, particularly its most vulnerable. This legislation has been introduced in 30 states, and only one – Colorado – has ever fully accepted it and implemented it. And that went so well, the citizens of CO voted to get rid of key pieces of it. …

The state provides a lot of services to everyone; that’s its job.  In particular, it provides services to the most vulnerable citizens that can’t get their needs met in the private market. The for-profit market stays away from certain services – like domestic and sexual violence crisis services, and services to assist the homeless and those experiencing food insecurity –  because there is no real opportunity to make a profit from those services (and also the nature of for-profit business means those businesses may feel more vested in making sure there is a continued need for the product they are selling rather than for solving a social problem). This is why we have a balance between public and private enterprise. TABOR legislation plays on the widespread misunderstanding the public has about how government is funded, and what services the government actually provides to us all (see this chart for an example of the services that may be left out with TABOR in place). These services help not just individuals, but also businesses, who make use of the investments we make in our common good – education, infrastructure, a thriving middle class – to sustain their organizations.

NC Budget and Tax Center

The North Carolina House just passed HB 943, which would put a $2.86 billion bond referendum before the voters this fall. This move is based on a growing consensus that investing in our schools, roads, state facilities, parks, and local infrastructure is an economic must.

Issuing new debt should be pared with a few pragmatic fiscal steps. First, we should not cut taxes again, which would undermine the flexibility we will need to repay the debt. Second, we should use regular appropriations to pay for most repairs, and keep the bond finances for transformative projects that move North Carolina’s economy forward.

If we are going to issue more debt, we cannot afford another round of tax cuts. If we borrow to improve the state’s infrastructure, the state will need strong future revenue growth to repay borrowers; more tax cuts or limits on revenue growth are bad fiscal policy. Moreover, reducing taxes even further could jeopardize North Carolina’s AAA rating, and force us to pay higher interest rates. The bond rating agencies are very sensitive to states’ long-term fiscal stability and states with lower credit scores have to pay higher interest rates. Other states that have cut taxes even more dramatically than North Carolina (e.g. Kansas) have been downgraded by the credit rating agencies, not an example that we should follow if we are about to purchase new debt.

Read More


If there’s a “most frustrating set of tax facts” to be considered today as this year’s Tax Week comes to a close, it’s got to be this: the billions of dollars that tax scofflaws cheat their fellow citizens out of and the conservative, budget-cutting policies that help enable it.

As Citizens for Tax Justice reported earlier this month:

“All told, American Fortune 500 corporations are avoiding up to$600 billion in U.S. federal income taxes by holding more than $2.1 trillion of “permanently reinvested” profits offshore. In their latest annual financial reports, twenty-eight of these corporations reveal that they have paid an income tax rate of 10 percent or less in countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens”

Meanwhile, billions of tax dollars go uncollected each year from corporate and individual taxpayers, in large measure because of conservative budget cuts at the I.R.S. As former National Association of Manufacturers chief Jerry Jasinowski wrote on the Huffington Post earlier this week:

“For five consecutive years Congress has taken an axe to the IRS budget imposing total budget cuts thus far of $1.2 billion. As a result, the IRS has lost 13,000 employees, 11 percent of the total. Last year, the IRS began 19 percent fewer criminal investigations than the year before. This year the agency expects to close at least 46,000 fewer audits. With 5,000 fewer revenue agents, revenue officers and criminal investigators, the IRS expects at least $2 billion that taxpayers owe to the government will go uncollected in 2015.”

And don’t think North Carolina tax collections are immune to this toxic pattern. The Charlotte Observer reported earlier this week that more than 300,000 people owe more than a $1 billion to North Carolina in delinquent taxes. Noticed any proposals on Jones Street in recent years to meaningfully beef up the state Department of Revenue?

The sad bottom line on all this: It isn’t an accident. The conservative campaign to undermine the legitimacy of public structures by underfunding them and thereby eroding public confidence in (and support for) them has been ongoing for many decades. Here in North Carolina, the war on public education has been the most visible example of this Koch-Pope ideology in action, but the efforts to undermine the agencies that administer and enforce tax collections is another.

We’re all suffering as a result of this disturbing cynicism.

Commentary, NC Budget and Tax Center, Raising the Bar 2015

Raising the Bar in North CarolinaEditor’s note: The following post by Beth Messersmith, NC Campaign Director with, is the latest installment in “Raising the Bar,” a new series of essays and blog posts authored by North Carolina leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved.

This week found my husband and I scrambling to make sure we had all of our I’s dotted and our T’s crossed as we hurried to make sure we had our taxes filed on time.

As he sat watching us from the couch, my almost ten-year old remarked about what a bummer it is to have to pay taxes. His sister stopped doing cartwheels across the living room long enough to agree and opine that she was glad that she didn’t have to pay them out of her allowance.

I guess I shouldn’t have been surprised. Anti-tax rhetoric is everywhere in the weeks leading up to tax day. Just that morning on the way to school the deejay on the morning radio show was talking about how much he hates paying taxes.

But their remarks were enough to make me stop my hunt for receipts and pull the kids onto the couch to talk to them about why —as a parent and a part of this country —I don’t mind paying taxes. In fact, I see it as part of my duty as someone who loves this country and benefits every single day from the investments we make as a society. And why, as a parent, I feel especially grateful for the investments we make in our children.

We started off by talking about their schools and the things that make schools work. They listed off their teachers, their supplies, the buses, even the buildings. Then I asked them who they thought owns our schools and employs our teachers. They’d never really thought about it. Explaining it to them gave me a chance to talk about how taxes are actually investments in our community and, in the case of schools, in the futures of the children who attend them. I shared how I benefited from public schools even before they were born as a student myself, as an employer looking to hire qualified people, and as a community member who benefits from an educated society. Read More