Imagine with me for a moment what would happen if Gov. Pat McCrory’s office and state legislative leaders released the following joint statement regarding a special session to address economic development in North Carolina:
The governor’s office and leaders of the General Assembly are today calling a special legislative session in order to create a more competitive, and fair, economic climate in North Carolina. The result would be more jobs, greater economic growth and the elimination of cronyism and political manipulations of the economy.
First, we recognize that government handouts to specific corporations are simply wrong. It is inappropriate and unacceptable for the government to use its force to coerce tax dollars from hard-working citizens only to dole those tax dollars out to politically favored companies that have the most lobbyists roaming the halls of the legislature. Not only does this provide an unfair competitive advantage to the subsidized companies, forcing other companies to downsize or go out of business, it also invites a culture of political corruption with corporations jockeying for a spot at the taxpayer trough. In this special session, we will introduce legislation to eliminate all government subsidy programs that involve taxpayer dollars being given to companies.
Secondly, we agree with advocates from the film industry that lower taxes stimulate investment and job growth. Jobs and investment do indeed dry up and industries are put in jeopardy when tax burdens are higher in North Carolina than they are elsewhere. With that in mind, we will also be proposing in this special session legislation that will extend the film tax credits indefinitely but, more important, will apply these tax credits to all business investment. If the film industry thrives due to the lowered tax burden resulting from the tax credits, imagine how many other industries will thrive in North Carolina if all businesses could take advantage of the tax credits that have enticed so much film production investment.
Indeed, our legislative staff has combed the state tax laws to identify all tax credits and exemptions applied to targeted businesses or industries. Included in our proposed legislation will be a mandate extending and applying equally every single one of these tax credits and exemptions to all companies doing business in North Carolina. This not only will generate tremendous job growth and economic prosperity, it is the only fair way to tax businesses. After all, what is more fair than taxing all businesses and economic activity equally? Even advocates of ‘social justice’ must agree to that standard.
We look forward to returning to Raleigh and passing legislation that will make North Carolina one of the most economically competitive states in the nation.
How many North Carolinians would be excited about this proposal? How many entrepreneurs and investors across the nation would become acutely interested in the outcome of this session?
Sadly, however, such bold leadership exists only in our imagination.
More groups keep coming out urging McCrory to call a special legislative session to expand so-called economic incentive programs and to extend targeted tax credits, especially the credits for the film industry set to expire at the end of this year. If there is a special session, bet that the proposals outlined above will not be up for discussion.
The political reality is that far too many politicians see personal benefit from the current crony capitalist system. Ribbon-cutting ceremonies at companies breaking ground courtesy of a huge taxpayer subsidy get politicians’ pictures in the paper. News releases taking credit for the latest business investment give the appearance to constituents that an elected official is “doing something” to create jobs. Campaign coffers swell with donations from special interests desiring the election of politicians who will keep the “economic development” gravy train rolling.
If all businesses began playing by the same rules, however, the political fanfare would stop.
And if it were clear that specific industries or corporations could no longer gain political privilege by currying favor with elected officials, the halls of the legislative building would be far less cluttered with lobbyists. Likewise, special interest money in politics would diminish considerably.
Perhaps someday North Carolina’s elected officials will rid the state’s tax code and budget of targeted privileges and instead expand the most generous of the existing tax credits and exemptions to all businesses. But until that time, unfortunately, all we can do is use our imagination.
Brian Balfour is director of policy for the Civitas Institute in Raleigh.