Study: Contrary to GOP Rhetoric, Tax Cuts Haven't Really Helped North Carolina All That Much | News

Study: Contrary to GOP Rhetoric, Tax Cuts Haven't Really Helped North Carolina All That Much

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North Carolinians haven't benefited from tax cuts over the past several years, according to a recent study by the nonpartisan but liberal-leaning Center on Budget and Policy Priorities.

The cuts were supposed to make North Carolina's economy soar, but in a state whose job growth rate was already well above the national average (5.8 percent compared to 4.2 percent), economic growth has instead leveled off in line with other states, according to the CBPP.

“State tax cut proponents often cite North Carolina as a model since its economy—unlike those of most states that have cut income tax rates deeply in recent years—is growing in line with the nation as a whole since cutting taxes,” the study says. “But even in North Carolina, the evidence is weak that the tax cuts caused the economy to surge. In the years before the tax cuts took effect in 2014, North Carolina’s economy generally grew faster than the national economy and in line with neighboring states, even though North Carolina had easily the highest personal income tax rates in the region and much higher rates than it has today. … Since North Carolina enacted its tax cuts, however, Georgia and South Carolina have outpaced its growth in GDP and private-sector jobs, putting the state in the middle of the pack among its neighbors, even though none of the others have slashed income tax rates.”

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Indeed, after North Carolina’s tax cuts were enacted in 2014, Georgia, Tennessee, and South Carolina all saw higher levels of growth in private-sector gross domestic product. Georgia and Tennessee also beat out North Carolina in private-sector job growth following North Carolina’s cuts.

In addition, the CBPP warned that tax cuts make it nearly impossible for states to improve their public education systems, which are integral to economic welfare. In North Carolina, where 53 percent of the general fund came directly from personal income tax in the 2016–17 fiscal year, tax cuts aren't helping an already lacking public school system.

Education Week ranked North Carolina fortieth out of fifty states and the District of Columbia in its overall education ranking for 2018. That continues a downward trend since 2011, when North Carolina was rated nineteenth.

All the while, the economy wasn't really improving in the way that Republican politicians promised. For the CBPP, this isn't surprising. It points to fifteen studies conducted since 2000 that illustrate the effects of personal income tax cuts across the nation. Eleven saw no considerable economic improvement, and the remaining studies showed inconclusive results.

North Carolina's personal income rates aren't the only taxes worth reconsidering. The GOP has also pushed for a lower corporate income tax rate of three percent. That went into effect at the beginning of last year, making it the lowest in the nation. So, as large corporations continue to benefit from tax breaks, our school system crumbles.


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