Consider that North Carolina has the highest tax rates in the Southeastern United States – and at the same time has falling wages, one of the worst jobless rates in the nation, and is ranked 44th in the country in business tax friendliness, according to the nonpartisan Tax Foundation. In fact, only 10 states have personal income tax rates higher than North Carolina’s top rate.
North Carolina’s current tax system was created in the 1930s during the Great Depression, when our economy was driven by vastly different industries. In virtually every session of the N.C. General Assembly over the last few decades, attempts have been made to patch together short-term solutions to update our tax code. But until now, no one has put forth comprehensive reforms to truly fix the problems.
This legislative session is different. Lawmakers are attempting to simplify and modernize our tax policies to match a 21st-century economy and create a pro-business environment that will make North Carolina attractive for new industry and high-paying jobs.
Each of the tax reform proposals being considered in the legislature would make our state more competitive with our neighbors and the rest of the country. They do it by closing loopholes and lowering rates – each lowers income taxes and taxes on businesses, something economists resoundingly say will help revive North Carolina’s economy.
The ultimate goal of the legislative leadership in Raleigh has been to present tax reform options that will be fair to all and lessen the tax burden on businesses so they will be freer to expand, innovate and hire. As lawmakers weigh different options, it’s important that people understand this big picture, pro-growth goal.
Simplicity is the other aim of tax reform. North Carolina’s current tax code is hopelessly complex, and includes numerous loopholes that give preferential treatment to special interests at the expense of most businesses and working families. Some of the proposals being considered, in addition to creating jobs, will make our tax code fairer by closing many of those loopholes, ending various exemptions and creating a simpler, more dependable system. There is no place for corporate welfare – tax breaks for favored industries – in our state. The one exception should be the non-profit sector, where the House plan leaves in place tax breaks for non-profits that are vital to allowing them to serve the public good.
These reforms are just a start. We have a long way to go before we reap the full benefits of a reinvigorated, healthy economy. But lowering tax rates and modernizing our state’s tax code are critical to creating jobs. That is the engine that will get us moving again. That’s what will set us apart and make businesses around the country stop and take notice of North Carolina.
A new approach is needed
Tax reform is important for another reason. For years we have watched our nation and our state pass countless job-killing laws and impose costly and overbearing regulations. This steady march of progressivism has resulted in the weakest economic recovery since the Great Depression, with millions still out of work and millions more dependent on government welfare and entitlement programs we can ill afford.
It’s been said that the definition of insanity is doing the same thing over and over again and expecting different results. Perhaps it’s time we took a new tact. Smaller, less intrusive government. More individual liberty and responsibility. Greater economic freedom. That’s how this great country was built – and that is what it will take to fix the mess we are in.
Our elected representatives in Raleigh are taking the first step down this path, providing the leadership that can create new jobs in North Carolina. Rather than picket and protest, we ought to applaud their efforts to make our state a better, more vibrant place to live.
Frank Dowd IV is the chairman of Charlotte Pipe and Foundry Company, a 112-year old N.C. manufacturer. He also serves as a board member of the Carolina Business Coalition, an N.C. business association dedicated to promoting free-enterprise and pro-business leadership in our state.
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