Just days after a New York Times editorial painted North Carolina as a state in financial and ideological decline, the Wall Street Journal’s political columnist cheered the legislature’s sweeping tax cuts:
“The plan is an impressive trifecta,” wrote Stephen Moore, “that will slash the personal income tax to 5.75 percent from 7.75 percent cut the corporate tax to 5 percent from 6.9 percent and eliminate the state death tax.”
There you have it: the yin and yang of U.S. politics, national newspapers whose editorialists have been paying close attention to the sea change in North Carolina. With Republicans holding unprecedented power in Raleigh, their opportunity to shape new tax policy and government services has finally come.
As the state House reached the end of a long debate over the tax bill last week, one proud lawmaker said anyone who doubted that lower taxes would stimulate the economy had only to search the Internet to find countless reports to that effect.
Not so fast. Such a search also reveals reports indicating it takes more than tax cuts to turn around an economy, including one that economists from the state’s leading universities presented to a House committee in the spring.
“The failure of numerous past reform efforts may have imbued tax reform with exaggerated import among legislators in its potential to positively affect economic growth,” wrote Brent Lane, executive director of the Carolina Center for Competitive Economies at the Kenan Institute of Private Enterprise, UNC Chapel Hill. “… [T]ax reform is a necessary, significant, but insufficient means to address our state’s economic growth challenges.”
While the Wall Street Journal cheers tax reform, North Carolinians are waiting for the rest of the story — the hefty budget cuts that will come as a result. The past few years have been lean for state agencies coping with Recession-related budget cuts. To some, state employees are merely “bureaucrats.” Others are more appreciative of the educators, court clerks, troopers, wildlife officers, university staffers and countless others waiting to see if their jobs will survive.
Then there are the community college students facing uncertainty over tuition, families afraid of finding even fewer services for a mentally ill son or daughter, elderly citizens wondering if transportation and nutrition programs will still be around to help them survive on their own.
Legislative leaders have been working on a final budget this weekend; the end result may be revealed today. Only then will we know the full story on the state’s new tax plan and whether it hurts more than it helps.