JLF Research Archive
Showing items 1 to 25 of 53
How North Carolina double taxes capital gains and what to do about it
Time to dump economic development policy
20 Years of Agenda
NC CON law is central planning beyond Bernie’s wildest dreams
Time to get serious about capital gains, the next step in tax reform
The best route to a real consumption tax is through the income tax
Target exercises right it didn’t have under Charlotte Law
Public Choice and Self Funded Campaigns
Charlotte bathroom ordinance -- The broader principle is property rights
North Carolina’s tax code penalizes savings and investment by double taxing their returns— specifically interest, dividends, and capital gains. These biases can only be eliminated by removing savings and investment from the tax base, or by eliminating the returns to saving; for example abolishing the taxation of capital gains.
The governor and Republican members of the state legislature are advocating for a host of new incentive programs and the extension and/or expansion of others. However, these programs are likely to harm consumers, investors, and entrepreneurs who are not privy to the subsidies.
Capital gains taxes penalize saving, investment, and therefore entrepreneurship, by imposing a second layer of taxation on equity investment. The most straightforward way to end this bias is to eliminate the tax on capital gains completely.
North Carolina passed a law during the 2014 legislative session taxing the liquid used in electronic cigarettes at an additional 5 cents per milliliter. This tax will hurt small businesses and violates the most important principle of good tax policy—neutrality. The North Carolina General Assembly should repeal the electronic cigarette tax.
The average North Carolina household in every income category received a tax cut from the 2013 tax reform. Considering both 2011 and 2013 tax changes, the average household in both the lowest and highest income categories is receiving a tax cut of about 1 percent of income.
Over the last several years there have been a great many claims about energy subsidies for both renewables and traditional sources like coal and oil. The analysis hasn't, but should, focus on net subsidies, which includes both subsidies and penalties. The important question is - how are coercive policies distorting supply and demand relative to a free market?
In 2013, North Carolina implemented fundamental tax reform, with changes to personal and corporate income taxes and sales tax. The plan cuts taxes by about $4.75 billion over five years, assuming the state meets certain revenue triggers and implements the plan fully. The importance of reducing tax revenues is that it transfers resources from political to private sector control, enhancing the overall efficiency of how these resources are used.
North Carolina’s state income tax penalizes people’s income generating activities, those that lead to the production of goods and services and spur economic growth. By reducing the rewards to all income-generating activity — work, saving, and investment — the income tax discourages those activities relative to non-income generating activities — leisure and consumption. The tax that should be adopted as a replacement for the existing income tax is what is called a “flat rate consumed income tax.”
North Carolina's corporate income tax should be repealed, not reformed. It violates all basic principles of sound economic policy and open government. It not only imposes a second and even a third layer taxation on many people’s incomes, but it is hidden, dishonest, and inconsistent with informed decision making in a free and democratic society.
Energy efficiency programs focus on the relationship between one input into the production process, energy, relative to the output generated by that process. This simplistic view makes no consideration for the strong possibility that other inputs -- labor, plastic, steal, copper, glass, etc. -- might actually increase. Economic efficiency, on the other hand, relates total costs to the value of the output that those costs generate.
Over the last decade, North Carolina has led the way among southern states in advancing a more extreme environmentalist agenda. The General Assembly's new Republican majority should start anew on environmental issues. Legislators should put environmental policy into the context of the ideas of liberty, personal responsibility, and economic growth that the party ran on last fall.
In 2010, North Carolina recorded the second-lowest number of high-ozone days of the last decade. Statewide, a total of 106 high ozone monitor readings were recorded over 26 days from April 1 to October 31, with 32 of those readings occurring on just eight monitors in two metropolitan areas. Despite what might be the popular belief, smog levels in North Carolina have been getting better, not worse.
Over the past decade the “demand side management” (DSM) model of public policy has crept into the state of North Carolina’s approach to regulation. Advocates of DSM are clear in making explicit their goals of social engineering and the rearrangement of lifestyles. The language in their guiding documents are replete with references to “behavior modification” and “restraining and restricting” certain activities or lifestyle choices. DSM is inconsistent with a free society, where the role of government is to respond to constituent demands, not manage and control them.
Over the past year the focus of North Carolina’s Joint Legislative Committee on Tax Reform has been almost exclusively on whether to expand North Carolina’s sales tax to include services. Following sound principles of tax reform, however, the focus should be on whether the tax base is what economists call neutral, and whether the tax conforms with the principles of justice, rooted in a respect for liberty and freedom of choice. At a combined average state and local rate of 7.98 percent, North Carolina’s sales tax rate is virtually tied with Tennessee’s rate of 8 percent as the highest in the Southeast.
In 2002 the State of North Carolina passed what was officially titled “Improve Air Quality/Electric Utilities,” which became better known as the Clean Smokestacks Bill (CSB). When the CSB was passed in 2002, it was estimated to cost $2.3 billion.
In 2008 the EPA dramatically tightened its standards for defining a high ozone day. Even under EPA’s more stringent new standard, North Carolina — both as a whole and within its major regions — has experienced significant reductions in the number of high ozone days.