• Research Report

    A Guide to Tax Reform: Current Effort Lacks Principles and Sound Data

    posted April 3, 2001 by Dr. Roy Cordato
    The need for fundamental tax reform in North Carolina has never been more obvious. Unfortunately, Gov. Mike Easley's "tax loophole" commission is incapable of fashioning a sound reform plan. It lacks guiding principles, is using a faulty definition of "loophole," and is more interested in raising tax revenue than reducing tax biases. Policymakers should pursue simplicity, neutrality, and equity through a consumed-income tax and other ways to flatten and reduce tax rates.
  • Research Report

    Changing Course II: An Alternative Budget for North Carolina

    posted March 31, 2001 by Don Carrington, John Hood
    Co-authors John Hood and Don Carrington follow up their much-celebrated 1995 report on North Carolina state spending, proposing 179 recommendations for budget savings and tax cuts totalling $725 million. (28 pages-not available online.)
  • Research Report

    Regulation in North Carolina: A Primer

    posted February 28, 2001 by Michael Lowrey, John Hood
    Like taxes, state and local regulations have an enormous impact on the average citizen as well as on businesses, especially small business — the key to job creation in a vibrant economy. In many ways, regulations are a more onerous and hidden way than taxes for the state to take resources out of the private sector to accomplish what is at least a purportedly public objective.
  • Research Report

    Changing Course III: An Alternative Budget for North Carolina

    posted February 28, 2001 by Don Carrington, John Hood
    The 1995 session of the General Assembly was unique in the history of North Carolina. After years of rapidly increasing state spending, both Gov. Hunt and the legislature expressed an interest in controlling spending growth and cutting taxes. As a result, operating spending grew by only 1.4 percent in FY 1995-96, by far the slowest rate of spending growth in a non-recession year this century.
  • Research Report

    A Costly Tax: State Lottery is Inefficient Way to Collect Revenue

    posted February 26, 2001 by Dr. Roy Cordato
    Policymakers should think carefully about the administrative costs of raising revenue through a state lottery. In effect, the state would be legalizing gambling, establishing a state monopoly on it, and then taxing gross sales at a 33 percent rate. The cost per dollar collected of this lottery tax would be 20 to 50 times greater than the cost of raising rates for other state taxes that already exist. The best course for the state is not to raise taxes at all but to reduce the size of government.
  • Research Report

    Easley’s Lottery Myths: Potential Revenue, Losses to Other States Inflated

    posted February 20, 2001 by Dr. Roy Cordato
    In his State of the State address, Gov. Mike Easley stated his case for a state lottery for North Carolina by suggesting that it would raise up to $500 million annually and that North Carolina's neighbors were collecting "hundreds of millions of dollars" from N.C. lottery players. Neither assertion is correct. The net proceeds from a lottery will likely be no more than $285 million. And a lottery's administrative costs would far exceed the current "loss" of revenue to other state lotteries.
  • Research Report

    Where’s The Budget? Hunt Proposal Hikes Operating Spending 5.9%

    posted February 17, 2001 by John Hood
    Gov. Jim Hunt's long-awaited budget recommendations for FY 1999-2001 do not actually present a full balanced budget to state lawmakers. Instead, the plan offers sizable increases in operating spending, particularly for education and corrections, while listing only "options" for dealing with the more problematic capital and nonrecurring sides of the General Fund budget. Of the $400 million in proposed "savings," the vast majority come from correcting the administration's earlier errors in projecting debt service and Medicaid costs.
  • Research Report

    Virginian Red Herring: Cross-Border Sales Poor Reason For N.C. Lottery

    posted February 11, 2001 by Michael Lowrey, John Hood
    One of the most common arguments in favor of a state lottery for North Carolina is that the Virginia Lottery attracts as much as $100 million in lottery ticket purchases from North Carolinians. But this revenue loss is exaggerated and dwarfed by the loss of revenue to out-of-state corporations that North Carolina would experience with a lottery. In reality, Virginia receives at most $34 million in state revenues from N.C. residents, while management fees paid out-of-state for operating a N.C. lottery would be at least $36 million.
  • Research Report

    Keeping A Float: Direct-Deposit Requirement Would Be A Tax Hike

    posted February 4, 2001 by Dr. Roy Cordato, Don Carrington, John Hood
    As one way of closing the state's ever-widening budget gap, Senate leader Marc Basnight has suggested that the state consider requiring retailers to pay sales taxes by electronic fund transfer rather than by check, thus allowing the state to collect additional interest on the money. This would constitute a hidden but costly tax increase on North Carolina businesses hobbling the state's economy as it slips towards a possible recession. Far better ways to close the gap exist.

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