by Mitch Kokai
Senior Political Analyst, John Locke Foundation
As National Review Online readers ponder one column praising the economic impact of recent N.C. government reforms, Forbes readers encounter another.
Realizing that the Point-To-Kansas strategy has gone stale, opponents of tax reform are at least acknowledging they have to address the reality that, despite the media’s obsession with the Sunflower State, there are many more examples from the states of rate-reducing tax reform paying economic dividends.
An example of this is a recent article by The Washington Post’s Todd Frankel, which was intended to make the reader come away thinking that the tax reform plan implemented in North Carolina four years ago did not benefit the Tar Heel State much. The tax reform plan enacted in North Carolina, like the plan working its way to the President’s desk, provided tax relief for households of every income level, as well as for businesses through significant personal and corporate income tax rate reduction. North Carolina lawmakers, also increased the standard deduction, just as the plan pending in Congress would.
In his article, Frankel focuses on the anecdotal experience of a Burlington,N.C.-based factory owner named Henry, who tells Frankel that he doesn’t know any people who benefitted from state tax reform. Henry’s ignorance here is to be forgiven, as prominent media outlets in North Carolina have covered the tax reforms enacted in their state just as misleadingly as the national media has covered the federal tax reform plan working its way toward final passage.
The fact is, the tax reforms implemented in North Carolina in 2013 and improved upon in subsequent years reduced that factory owner’s corporate tax rate by 56%, taking the rate from 6.9 to 3% in just four years, assuming his business files as a c-corp. Thanks to the budget approved this year, that rate will fall again to 2.5% in 2019. The workers who earn their paycheck in Henry’s factory also benefitted from the tax reforms enacted by North Carolina legislators. Since 2013, the top income tax rate paid by workers (and small businesses that file under the individual income tax system) has fallen 29%, from 7.75 to 5.499%, and is scheduled to drop further to 5.25% in 2019. By raising the standard deduction, Republican lawmakers have also increased the number of people with no state income tax burden.