by Leslee Kulba
Wild West blogger
There is much buzz today about the great budget compromise reached by caucuses in the General Assembly. Most laudably, the proposed changes mostly move in directions recommended by those of us who believe allowing producers to keep more of their income is the best thing government can do to heal the economy.
Elizabeth Malm, an economist at the Tax Foundation, said the changes would boost North Carolina from 44th to 17th in their “State Business Tax Climate Index.” The Tax Foundation, based only on wee, limited research, is my favorite for comparing the very diverse tax structures across the fifty states. They use an algorithm with 118 weighted variables, and they claim businesses prefer to locate where tax structures are low-rate, streamlined, and less punitive of contributions to society.
Critics, of course, have finally learned to subtract. They claim the state will lose a bunch in the first round, and a bunch more in the second, as tax decreases are phased in. Although the word on the street is that most heads of entrepreneurial startups would prefer to set up shop in a low-tax, reasonably-regulated environment than to lobby and kiss up for tax-subsidized favors, it is not safe to assume creating this climate is going to attract any new business. We must further not pretend that letting marginalized businesses keep more of their money is going to allow them to stay in business or maybe even hire some help, possibly to keep up with orders once pricing is competitive.