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North Carolina Progressives Demand Billions In Higher Taxes, 80 Percent Corporate Tax
by Patrick Gleason
Ever since progressive activists began weekly protests outside of the North Carolina capitol last year, the Tar Heel State has been the nation’s political tinderbox. Referred to by the media as the Moral Monday protests (a dubious term, as it implies that those who disagree on matters of policy are immoral), the weekly gathering has continued throughout the 2014 session of the North Carolina legislature, which began last month and is slated to adjourn at the end of June. Aside from general unhappiness with conservative reforms enacted by North Carolina Republicans, who took control of the legislature for the first time in over a century in 2010, it’s been difficult discerning what exactly it is that the left-of-center protestors want.
Prior to the start of session, Senate President Pro Tem Phil Berger sought to get to the bottom of what it is that the Moral Monday protestors want and how much it would cost. Sen. Berger, who was named to the Washington Post’s list of emerging stars outside the Beltway last year, sent a letter to Reverend William Barber, President of the North Carolina NAACP and ringleader of the Moral Monday protests, asking for a list of specific policy changes that they want. Rev. Barber responded with a list of demands, which entails raising taxes, permitting collective bargaining for all government workers, expanding Medicaid, state subsidized child care for all, and state-provided health insurance for all. Sen. Berger then sent Rev. Barber’s agenda to the North Carolina General Assembly’s non-partisan fiscal staff to tabulate the cost.
North Carolina State Legislative Office Building (Photo credit: Wikipedia)
The non-partisan fiscal staff found that the Moral Monday agenda, if implemented, would require state lawmakers to raise taxes by $7 billion. For some context, such a tax hike would increase the North Carolina general fund by a whopping 35 percent. The Moral Monday plan would also necessitate a nearly ten-fold increase in the state corporate income tax, taking the rate from 6 to over 50 percent. Combined with the federal corporate income tax, the highest in the world, if Rev. Barber and crew had their druthers, companies would face a combined corporate tax rate of over 80 percent on profits earned in North Carolina. The likely result of such an onerous tax would be a mass evacuation of companies from Research Triangle Park, Charlotte, and elsewhere in the state.
The Raleigh-based Civitas Institute estimates the Moral Monday agenda would require an additional $10 billion a year in higher tax revenue, which amounts to an unheard of 50 percent increase in the state general fund. While an amendment has been drafted to fund Moral Monday’s expensive agenda, don’t expect to see Democratic legislators in North Carolina champion and introduce it, even the most liberal. Just as President Obama’s budgets have garnered a grand total of zero votes in the Democrat-controlled U.S. Senate, legislative Democrats in North Carolina are showing a similar aversion to putting their money where their mouth is when it comes to funding a progressive budget.
As Sen. Berger noted in his letter to Rev. Barber, when Republicans took control of the legislature four years ago, the state had the highest personal and corporate income tax rates in the southeast, along with an 11.2 percent unemployment rate, the fourth highest in the nation. Thanks in large part to the reforms enacted since then – such as regulatory reform, unemployment insurance reform, and the historic 2013 tax reform act that will allow North Carolinians to keep more of their hard-earned income – North Carolina has witnessed a tremendous economic comeback. With the addition of more than 200,000 jobs since 2011, North Carolina’s unemployment rate is below the national average for the first time since 2006. In fact, since the Moral Monday protests began in April of 2013, there has been a 39 percent reduction in North Carolina’s unemployment rate, dropping from 8.9 to 6.3 percent.
The Moral Monday crowd may have been too busy getting worked up to notice, but North Carolina is experiencing an impressive economic recovery under Republican leadership, even while coping with anti-growth policies coming out of the White House. Furthermore, it’s now clear that the progressive North Carolina protestors’ agenda, once the actual costs are advertised, won’t find much support even from Democratic legislators, let alone the public.
Patrick Gleason is Director of State Affairs at Americans for Tax Reform. Follow Patrick on Twitter @PatrickMGleason