We anticipate additional short term job creation depending on the pace of the overall economic recovery and the individual decisions made by the half million businesses across North Carolina. In both the short and long term the State should also gain more jobs through relocations of new employers attracted in part by a more competitive tax environment. While such job gains cannot be forecast, the overall effect of the proposed tax changes can be assumed to enhance North Carolina as a location for both existing and relocating employers.
The proposed changes in question include:
• Expiration of the temporary 1-cent sales tax
•Expiration of personal and corporate income surtaxes
•Reduction in the corporate tax rate to 4.9% effective tax year 2012
•Reduction in business income taxes for S-corporations, limited liability corporations (LLCs), and sole proprietorships, including exemption of the first $50,000 in non-passive business income from taxation.
The findings in this report; although very similar in nature to that of research conducted through the years by conservative think-tanks such as Civitas; are considerably noteworthy, given the traditional nature of contradicting economic policy supported by the UNC system.
Fiscally conservative economics dictates that basically, the less burden applied from the government to the private sector, the more financial and regulatory freedom the free market will enjoy; resulting in liberated resources with which to hire additional employees, invest in research and development, spend on capital projects - creating a positive economic impact in and of itself, and the more confidence the market projects outwardly and into the future.
The proposed tax policy changes will have both short term and long term effects. Over the next two years the proposed changes will positively stimulate the State’s private sector economy as citizens and businesses retain and use money that otherwise would have been paid as taxes.
Once the tax reduction impacts are fully realized in fiscal year 2012-2013, the proposed tax changes will result in base level economic effects including:
•$2.3 billion in increased NC industry output;
•nearly $700 million in new NC labor income; and
•creation of almost 20,000 new private sector NC jobs at an average wage of $35,969
This report underscores the need for less interference from government, in order to promote a healthier free market economic climate - and put people back to work; thereby getting them off of the state's overburdened unemployment rolls.
Also included, was an analysis of the state's historical position on economic development, which has traditionally been a multitude of expensive government agencies handing out large portions of taxpayer cash to chosen businesses. This has created artificial and short-lived bursts in economic activity, at the cost of billions of taxpayer dollars, that can only be replenished by taking from businesses and taxpayers to repeat the endless cycle. Countless stories of businesses locating here for the handouts, and then pulling up stakes and leaving has been the result; leaving a gaping hole in the economy in its wake.
The devastation is reported here:
As recently as the 1990’s North Carolina’s businesses – large and small - added an average of 66,000 new jobs each year. But over the past decade, despite large investments in economic development programs, organizations and incentives, the State actually lost an average of 9,000 jobs each year.
Perhaps the most point-blank observation is, "...it is very clear that economic development “success” is not the same as a healthy economy". This revelation flies in the face of traditional economic development advocates who believe that a healthy economy is one where an ever-growing government projects more and more influence over the private sector by picking winners and losers with taxpayer cash. The impacts of this long-standing philosophy in North Carolina have been especially devastating.
The failed economic development policies of the new progressives occur at the local level as well. The findings in this report challenge the long-held notion that we must continue to richly fund economic development monoliths such as Wilmington Industrial Development (WID) in order to have a sound economy. Recent news that WID has experienced record revenues, and pays their top executive over $300,000; while unemployment in our region continues to hover at and around 10% shows the disconnect mentioned in the report, that "economic development “success” is not the same as a healthy economy".
Hopefully, leaders across the state will take note, and lessen the overwhelming boot of government off of the neck of the private sector.
View the Report Summary here: http://www.scribd.com/doc/57301664/Rucho-Tax-Reduc-Letter
Special thanks to Rep. Carolyn Justice for providing this report, and for her fearless stance on sound economic policy.