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 Tax Foundation estimates that, once all reforms are fully phased in, North Carolina’s overall business tax climate ranking will be 13th best in the country. According to the 2016 index, North Carolina is now ranked as the 15th most attractive business tax climate.
This study surveys North Carolina’s most populous cities and examines how each conducts economic development in its jurisdiction. Collectively, they entered into 238 economic development contracts worth more than $65 million over the five-year period. Actual payments, however, totaled $20.2 million.
For fiscal year 2015-16, the General Fund budget will rise 3.1 percent to $21.7 billion, below the combined rates of population growth and inflation. The following year, the budget will have an overall increase of less than one-percent.
Between FY 2009 and FY 2014, 81 out of North Carolina’s 100 counties participated in economic development activities. Counties entered into 776 contracts worth nearly $284 million in incentives over the five-year period. Actual payments, however, totaled $144 million.
A reverse logroll for the 2015-17 biennium budget would greatly benefit taxpayers, leaving surpluses of approximately $383 million in the first year and $639 million in the second year. This allows lawmakers more flexibility to lower taxes or fund other priorities.
The John Locke Foundation is continuing its tradition, started in 1995, of offering an alternative to the governor’s budget recommendation. Consistent with prior years, this JLF budget focuses on core government. This budget spends less in both years of the biennium than the governor’s, and only increases spending by 2 percent from the last fiscal year.
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.
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