Reversing course on education and taxes needed for long-term prosperity

Reversing course on education and taxes needed for long-term prosperity


The new school year has barely begun, but it’s not too soon to grade North Carolina lawmakers and the governor on their commitment to education: FAIL.

Teachers and students have come back to classrooms diminished by policymakers’ decision to make our kids’ education a lesser priority than giving tax cuts to the wealthiest North Carolinians and the state’s most profitable corporations. It doesn’t take a genius to figure out this means students will not get the kind of quality education that will secure a better future for them and North Carolina. Everyone will pay the price for that shortsighted choice.

North Carolina is spending about $260 million less per year on public schools than it did before the recession.

The difference is roughly equivalent to the cost of the tax cuts that wealthy households and big corporations will receive over the next two years. But of course, the issue isn’t just the money; it’s what the money buys. For a child who started Kindergarten in 2008, crowded classrooms, outdated text books and fewer resources overall have become the unfortunate norm. Parents, teachers and the community are telling that now 10-year-old child to value an education, yet state policymakers haven’t put much value on it themselves.

By walking away from all-important investments in educating the next generation of North Carolina working men and women, we put at risk the very foundation of our state’s economy. Our own history has demonstrated that education can fuel private sector expansion through entrepreneurship and research and development. Before the recession hit, our commitment to education encouraged businesses to locate and expand in North Carolina because they knew they would find a skilled workforce and strong research universities to offer expertise to their industries.

Some powerful recent research backs up our experiences in the recent past. It shows that: a) for the individual, the more education you have, the more likely you are to have a job and the more likely it will be a job that pays a higher salary, and b) for the state, a more educated population translates into higher productivity and higher wages overall.

Clearly, education is the best tool a state has to promote widespread prosperity. Over the past 30 years, workers in many industries have seen their wages stagnate or fall despite the fact that they work harder and longer and produce more than ever before. But better educated, highly trained workers have bucked this trend.

That’s why the recently enacted tax cuts are so bad for North Carolina’s future. They will drain even more resources from our schools, leaving the next generation of workers ill-equipped to compete for better jobs and higher wages. Many employers will look outside North Carolina for the workers they need. We will have squandered what for years was a big advantage over neighboring states.

The claim of tax-cut supporters that their policy will help the state’s economy by luring more businesses to North Carolina and encouraging existing ones to expand is way off target. In fact, neither outcome is likely. For one thing, most of the money from the corporate income tax cut will flow to out-of-state shareholders. That’s no help to North Carolina. And the wealthy North Carolinians who will benefit most from the personal income tax cut are not likely to create many new jobs.

Businesses hire when they believe they will have more customers, no matter what the tax rate is. A CEO who expanded just because taxes went down wouldn’t last long. State taxes are such a small fraction of the overall cost of doing business that the math on which tax-cut advocates base their promises just doesn’t hold up.

All North Carolinians want a prosperous state. But tax cuts won’t make that a reality. What will is a renewed commitment to our schools and a first-class workforce that can compete – and win – in the 21st century global economy. The stakes are high and it’s not too late to change course.

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