NC Budget and Tax Center

Economic experts slay arguments for tax cuts

Economists with the Economic Policy Institute recently released a concise but well-resourced guide that responds to some major questions that often arise when policymakers turn to tax cuts to solve our economic challenges.

Here’s the report’s bottom line answer to the question of whether tax cuts should be a priority for policymakers:

“Tax cuts provide no durable solution to any genuine economic problem for America’s working families, but do make some genuine problems even worse.”

Check out the full piece here.

And then turn to the latest analysis from Josh Bivens of the Economic Policy Institute showing that real-world data finds no wage boost from corporate tax rate cuts.

Federal policymakers should heed the evidence, as should North Carolina policymakers who have continued to reduce the state’s corporate income tax since 2013 so that it is now the lowest in the nation. Real-world data in NC: Median wages are still below where they were when the national economic recovery began.

NC Budget and Tax Center

Federal tax changes benefit the wealthy, reduce funding for NC communities

Last week, with the release of the tax changes planned by President Trump and leaders of the US Congress, North Carolina taxpayers braced themselves for another layer of experimentation that is sure to fail our communities and our economy.

New data released today by the Institute on Taxation and Economic Policy confirms that the tax changes will primarily benefit the country’s wealthiest taxpayers, fail to target the middle class and reduce the ability to fund core public services in all 50 states.

In North Carolina, 57.6 percent of the net tax cut goes to the top 1 percent of taxpayers in the state.  While better than the national figure of 67.4 percent, it is a staggering figure signaling the failure to achieve the middle-class tax cut promised.

Here are three additional points that are important in reviewing the proposed changes at the federal level: Read more

NC Budget and Tax Center

Failed tax-cut experiment hurts NC – don’t let it hurt the country

Senator Thom Tillis is trying to sell national leaders and elites on North Carolina’s failed tax cut experiments.  His commentary in the Wall Street Journal this week cherry picks data and ignores the growing evidence that many communities and taxpayers in our state have been hurt by the approach to tax cuts that have primarily benefited the wealthy.

Most egregiously, it shows that Senator Tillis has not taken the time to monitor the way in which the choices made in 2013 have played out in his home state over the past four years.

We have.  Here is what our analysis tells us. Read more

Back to School Series

Measuring poverty shows that government programs are working

Every year when the Census Bureau releases its annual updates on the economic well-being of the nation and our state, we turn to a measure that has largely been rejected by most people as reflective of what it takes to get by today.

The poverty measure, as typically lifted up in media reports, is calculated based on the food choices of families living in the 1950s.  There are various efforts to get a more accurate sense of what it actually takes to makes end meet and avoid hardship—doubling the figure is one way that gets you to the definition of low-income in most circles, and another is developing market-based measures on the costs of the full range of goods a household needs, like the Living Income Standard.

The US Census Bureau and academic researchers have developed another tool—the Supplemental Poverty Measure. This measure includes the government programs that seek to serve low-income people that aren’t accounted for in the official poverty measure. In the U.S., this measure shows that 13.9 percent lived in poverty and that the two most significant programs working to move people out of poverty were Social Security and Refundable Tax Credits. Read more

NC Budget and Tax Center

Job announcements still fall short of 16,000 new jobs needed every month in N.C. to get back to pre-Recession levels

The North Carolina GOP released a press release this week touting August job announcement figures as indicative of the success of their policy choices that have cut taxes for the wealthy and profitable corporations, put our natural resources at risk and reduced support for the tools like unemployment insurance and job training for people who have lost their jobs.

Set aside that once again there has been no causal relationship proven through the simple statement of job growth occurring. It remains important to evaluate these statements against what we know.

First, the job announcements in August have not materialized into jobs just yet.  From time to time, there are announcements that don’t end up turning into actual jobs, despite best efforts. Moreover, it is unclear how many of the jobs will go to current North Carolina residents and how many will go to those relocating from other states. The August jobs numbers from the Bureau of Labor Statistics will be released on Sept. 15.

Second, North Carolina’s job growth year over year continues to be on par with national job growth.  From June 2016 to June 2017, North Carolina’s employment grew by 1.7 percent, while the nation’s grew by 1.6 percent. This suggests that North Carolina’s policy choices are not driving differences in employment growth but instead that the state is finally growing in step with the nation.

Finally and most importantly, this job growth is insufficient to achieve pre-Recession levels of employment. Each month North Carolina would have to create 16,000 jobs to make progress towards that employment level in the face of a growing population.

Three thousand may get us a fifth of the way there, if they materialize. But we’d like to see a press release on what their plan is to actually boost employment for those who continue to face too few job opportunities in their community, need retraining for new industries, and experience other barriers to employment. Because tax cuts just make it more difficult to close the jobs gap in North Carolina that persists eight years after the national recovery began.

Alexandra Sirota is the Director of the Budget & Tax Center, a project of the NC Justice Center.