by Greg de Deugd
Creative Director, John Locke Foundation
While she might not have dreamt of state budgets since she was a little girl, fiscal analyst Paige Terryberry is indisputably an expert today. In this second episode of Policy Pizza, Paige gives us the basics of state revenue and spending and a quick sketch of why we are experiencing inflation today.
North Carolina’s state government gets its money from people like you. Over half of the state’s General Fund comes from individual income tax, and a third comes from sales tax. The rest comes from corporate income, franchise, and other taxes. That money is primarily spent on staffing. 56% is spent on education, 22% on health and human services, and 13% on public safety.
With its emphasis on fiscal responsibility, North Carolina’s tax policy has allowed the state to save money and even give money back to taxpayers, which then grows our economy. An increased standard deduction, enacted in North Carolina in 2013, makes sure all taxpayers have some income that is not taxed. This led to North Carolina having some of the lowest unemployment in the nation.
During the coronavirus pandemic, the government stood between people and their willingness to make money. This led to a substantial economic downturn. The government then injected 25% of our GDP into the economy. Free money is easy to sell, but the consequence of massive spending is the inflation we see today.
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