Taxes and the truth

Taxes and the truth

- in Fitzsimon File

There is an adage that maintains that if you say something often enough, people will believe it.  That appears to be the strategy of the folks fighting to cut taxes this session of the General Assembly, to ignore the facts and claim that North Carolina tax rates for corporations and wealthy individuals are too high and are hurting economic development.

Unfortunately, it seems to be working, at least according to reports about the Senate budget that is scheduled to be unveiled early this week. Senate leaders want to reduce taxes by a quarter of percent on the state’s wealthiest tax payers and cut the sales tax by one-fourth of a cent.  Combined, the tax cuts will cost $225 million a year.

The folks at North Carolina Citizens for Business and Industry are leading the tax cut propaganda offensive. Reducing taxes is one of their highest priorities this session

Senator Richard Stevens was on television recently to oppose an increase in the state minimum wage and used the occasion to tout NCCBI’s line about taxes.

He even embellished the usual talking points, claiming that North Carolina’s sales tax is also the highest in the Southeast and saying that businesses look at tax rates on income, sales and property when deciding where to locate a new facility.

Tennessee’s sales tax is higher than North Carolina’s and our state generally ranks very low in terms of property tax rates. Too bad the reporter doing the interview let Stevens’ comments go unchallenged and didn’t mention the latest issue of Site Selection Magazine that ranks North Carolina’s Department of Commerce the best in country.

The ranking is based on a variety of statistics about business climate and new jobs attracted to the state. The article reminds readers that North Carolina has had the best business climate in the nation four out of the last five years. Doesn’t sound like taxes are too onerous.

Forbes recently cited Raleigh and Durham as two of the top ten cities in the country to do business.  It seems like every month brings another confirmation that taxes are not too high at all. 

The budget surplus this year also proves it. The state’s economy is booming in many areas. Hard to imagine that happening if tax rates were so burdensome.  Yet the calls for tax cuts continue and sadly the Senate is listening.

It is all not just an abstract policy exercise. Cutting taxes means less money to invest in things that do matter in economic development and the quality of life for people in North Carolina, affordable housing, education, child care, transportation, etc.

The folks at NCCBI know that quality of life matters to companies looking at North Carolina. The group’s legislative agenda includes a call for investment in higher education and public schools. 

Apparently no one there has figured out that you can’t invest in education if the money is paying for tax cuts, but at least NCCBI admits we need to fund improvements in our schools.

State lawmakers are now trying to decide if they should support Governor Mike Easley’s request to fully fund the state’s low wealth school formula that provides supplemental funding to the state’s poorest schools systems or end a yearly across the board budget cut that reduces the operating budgets of systems across the state.

As the Public School Forum points out, giving money to poor schools and then cutting their budget makes little sense.  And only funding the low-wealth formula means many schools still face budget cuts even as their costs to operate increase.

It is a choice lawmakers shouldn’t have to make. Poor schools should get extra help and schools should no longer have to wrestle with budget cuts. Lawmakers can make both happen this session, by rejecting the repeated claims that our tax rates are hurting the state. It is simply not true, no matter how many times the lobbyists say it.

About the author

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina.
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