State leaders look to lock in an economic system that is failing many, working for the few

State leaders look to lock in an economic system that is failing many, working for the few

In our economy there are two kinds of people: people who work for money and people whose money works for them. For years, North Carolinians have been told that when rich people and big companies get a tax cut we all benefit. For even longer, our country’s leaders have prioritized policies that give tax breaks to the rich and corporations with the same promises.

The result is that for the top 1 percent, those whose average income each year is a million dollars, things are going quite well, according to new data.  In North Carolina, since the recovery began in 2009, the top 1 percent have captured all – yes, ALL – of the state’s income growth. Meanwhile, the bottom 99 percent of North Carolinians have seen their incomes decline over the same period.

And the economic outlook for working people is getting even worse, to the point that researchers are connecting economic despair to things like opioid addiction and early death. Communities have lost the employers who anchored their economic and civic life, and people are working more hours for lower wages.

Some leaders in North Carolina and in Washington would have us blame our economic challenges on the very people that have historically been excluded from opportunity—those living in poverty, communities of color and immigrants. By scapegoating these North Carolinians, they hope that we’ll be too distracted to notice the constant stream of tax breaks and special rules that allow the rich to get richer at the expense of the rest of us.

It is, after all, the choices that put the rich ahead of everyone else that make it harder to build the bridges—through education, good job creation and infrastructure—that connect more people to the opportunity to thrive. Policy choices are maintaining our top-heavy economy.

What if instead we made sure that people are able to visit a doctor when they are sick, that no child grows up hungry, and that a hard day’s work pays a family-sustaining wage? That is what a thriving economy looks like. It is one where we all share in the benefits of growth and are able to build wealth regardless of what we look like, where we live, or who our parents are.

It is disturbing that policymakers in North Carolina continue to reject this proven path to prosperity and instead make policy choices that keep channeling benefits to the wealthy few.

Just last year, the General Assembly chose to keep in place a set of tax cuts that go into effect in January 2019 even as teachers, parents and students demanded a greater commitment to education. Even as families voiced concerns about the safety of their water. Even as communities requested state resources to build an infrastructure – roads, bridges, and public transit – that would boost their local economies and help small businesses.

At the same time, legislative leaders took one more step in the wrong direction: a ballot measure that North Carolinians will vote on in November. It would lower the cap on the income tax rate in the state constitution, a move that, if approved, will prevent us from raising much-needed revenue from the very rich. With a limit on the income tax,  future policymakers will have to choose between raising sales and property taxes — which fall harder on middle- and low- income people — cutting services, or some combination of both.

Such a change will put our state’s economy on autopilot pointed in the wrong direction, one of under-investment in the common good where people who work for money will struggle while the wealthy few continue to make gains.

Alexandra Sirota is the Director of the N.C. Budget and Tax Center.