The overwhelming evidence shows that the economy is not delivering security and opportunity for many in North Carolina. A persistent lack of jobs is driving high unemployment and sluggish wage growth, as well as the failure of any economic and job growth to equally reach every community of the state, according to independent assessments by economists, researchers and the media.
Everyday North Carolinians, the real experts on this issue, agree. Three out of four North Carolina voters don’t believe that things are getting better. A recent News & Observer article by Craig Jarvis contained the crux of the issue: Policymakers and business leaders thought that cutting taxes would deliver a stronger economy. Not only has that not happened, they now lament that they don’t have the tools to invest in proven strategies like education and infrastructure.
The connection may not be so clear to them, but their sinking suspicions about what North Carolina needs to grow a stronger economy belie their commitment to failed trickle-down economics.
Given the known limits and damaging results of this flawed and theoretical approach to growing the economy, it is breathtaking how pervasive it has been in Raleigh over the past few years. Policymakers ushered in the first round of tax cuts that primarily benefited the wealthy and profitable corporations in 2013 under the flawed assumption that if we all pay more in sales taxes, it would free them up to create jobs.
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However, it turns out the wealthy and profitable corporations don’t create more jobs when they don’t pay taxes. They create jobs when people buy their stuff or they see an opportunity to create or pursue a new market. In the case of wealthy millionaires, the chance that they will be job creators at a large scale is even smaller. And the average tax cut of $14,000 received by millionaires recently isn’t likely to prompt wealthy North Carolinians to hire on its own.
And that is just one reason why prioritizing the tax cuts over all else has missed the mark. The other reason is that the tax cuts being pursued have left few resources for useful investment or economic development approaches for communities and businesses. Lew Ebert, CEO of the NC Chamber and proponent of the tax cuts for profitable corporations strategy, told The News & Observer that the economic challenges the state faces can be solved by increased education funding and investment in infrastructure. Those public investments cannot happen while more tax cuts are pursued.
It is time for business leaders to be outraged that our leaders cling to a flawed idea about how the economy works. It is time now to consider that the better path lies in growing the wages of more North Carolinians and ensuring every community has a vision for a better future and the tools to realize it.
Such an effort begins with us all putting our leaders on notice: Eroding the quality-of- life assets that our state has built, sustained and protected — from our university system to our natural resources — isn’t working for working people.
It is time for a discussion of the policy choices and public investments that must be made immediately to broaden the reach of the expansion and build an economy that works for all.
Alexandra Sirota is the director of the Budget and Tax Center of the nonprofit NC Justice Center in Raleigh.