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The most thoroughly documented failure of state government is not its criminal justice system, which is indeed riddled with problems. Or its penal system, which keeps expanding while ex-cons keep committing crimes. Or its public schools, which consume more money each year but which have an appallingly high dropout rate and in many schools a poor record of achievement.
No, it's North Carolina's revenue system. It was designed nearly four generations ago in the Great Depression, when this state was losing its agricultural base and becoming more of a manufacturing center in textiles, furniture and tobacco. But that was in the first third of the 20th century. The tax system that helped build an increasingly prosperous state in the last half of the last century is impeding this state in the first decade of the 21st century.
Why? Because our tax system has failed to change as our economy has changed. Instead of broadening the tax base to reflect the changing ways the public earns and spends its money, the state has resorted to a self-defeating way to pay for essential services: It has simply kept on raising tax rates, sometimes calling them temporary and making the public more cynical about government.
The inevitable result is that the tax system not only doesn't provide adequately for schools and public safety, it even impedes a recovery from the current economic downturn by imposing higher taxes. Legislators who refuse to understand that concept have contributed to the state's sluggish response and its high rate of unemployment.
Instead of tackling structural tax reform in the most recent legislative session, they worsened our situation - raising sales taxes on a populace that is consciously spending less. That's exactly the wrong thing to do.
Some legislators, such as state Sens. David Hoyle, D-Gaston, Dan Clodfelter, D-Mecklenburg, and Clark Jenkins, D-Edgecombe, have been working to develop a system that (1) broadens the tax base and (2) cuts tax rates. But they've largely been working alone without much help.
Only recently has Democratic Gov. Bev Perdue embraced the concept of tax reform. House Speaker Joe Hackney, also a Democrat, says he wants to move forward, but he's not rushing into it.
"There's a need to move in that direction and I think we will," Hackney told the Greensboro News & Record. "But it needs to be done carefully and with full thought."
And Republicans have been leery of any system that is not revenue neutral. Sen. Phil Berger, the Senate Republican leader told the same paper, "I'm not optimistic that's the direction it's going to take."
Revenue neutrality, meaning a plan that brings in only the same amount of money as the previous one, might sound good. But at a time when the state is struggling to maintain schools, mental health programs and provide other essential services, revenue neutrality may simply be another way to fail to meet the state's needs.
Members of the House and Senate finance committees must keep that in mind when they begin meeting Nov. 3 to hammer out a possible approach to reshaping the state's tax system. They'll need more than sound proposals on their side.
They'll need the business community's active, aggressive support. Unless businesses can show support for this effort, tax reform will come to the same lame ends. Former Gov. Jim Hunt and the Institute for Emerging Issues at N.C. State University have done much of the groundwork for structural tax reform. That group may be instrumental in generating support among business leaders who recognize that good schools and sound basic services provide the best business atmosphere - and require adequate revenues.
And they'll need the governor, who has had her hands full making ends meet. She must make the case for a new system that features lower rates covering a broader tax base. Until recently, she simply avoided the issue. In August she claimed tax reform as "a huge must-do for me and the people of North Carolina." Let's hope she means it.
They'll also need the best efforts of both political parties to break a cynical cycle of simply raising the rates on a tax system that just does not work anymore.
