by Mitch Kokai
Senior Political Analyst, John Locke Foundation
No one should blame you for inferring from mainstream media reports earlier this week that Brent Lane of the UNC Center for Competitive Economies considered North Carolina’s tax reform plan less than impressive. The News & Observer spun this narrative:
Even with the accord, major questions remain – particularly about whether it will lead to more jobs or make it more difficult for the state to offer popular government services to its growing population.
Flanked by Commerce Secretary Sharon Decker, McCrory said the legislation will spur the recruitment of out-of-state companies and help those located in North Carolina to expand. North Carolina’s jobless rate remains the fifth highest in the nation at 8.8 percent.
“It sends a positive signal to citizens and most importantly to job creators that North Carolina is open for business,” McCrory said.
But a UNC-Chapel Hill economist told lawmakers earlier this year that such suggestions are “exaggerated” and not quantifiable. “In that context, tax reform is a necessary, significant but insufficient means to address our state’s economic growth challenges,” concluded Brent Lane in a legislative report.
Given the N&O‘s track record for balanced coverage of the tax reform debate, you’ll no doubt be shocked — shocked! — to learn that Lane’s views are somewhat different from those implied in the passage above. The Triangle Business Journal offers us this assessment, under the headline “Lane: Tax reform helps business, individuals.”
Brent Lane, a researcher with UNC’s Frank Hawkins Kenan Institute of Private Enterprise, says tax reform legislation agreed to by leaders of both houses of the General Assembly and Gov. Pat McCrory benefits both individuals and businesses.
By changing elements such as what he calls an “uncompetitive” and “inefficient” 6.9 percent corporate tax rate, the bill paves the way for large businesses that might otherwise look to operate in other states to come to North Carolina without significantly detracting from the state’s revenue, he says.
Lane also addressed the lowering of the individual income tax rate, which he said could provide a small boost to all forms of business in the state.
“(Tax reform) is not a fuel that drives the state, like geography, workforce and market demand. It’s the lubricant that helps it run – government efficiency, regulatory reform, and tax policy … reduce the friction.”
None of this should surprise those of you who remember Lane’s comments last November about the “imperative” of North Carolina pursuing tax reform.