We hope our state legislature will take seriously a new report from a left-leaning advocacy group that warns against the next round of corporate tax rate cuts. According to the N.C. Justice Center, the cuts won’t benefit the state, BH Media’s Richard Craver reported. And that — the good of the state — should be the determining factor.
A report from the center, “Corporations over Carolinians?” makes several points that are worth considering. For one, “North Carolina’s corporate tax rate cuts failed to fix our most pressing economic problems,” the report said. They “have failed to create pathways out of poverty or generate enough jobs that pay a living wage. Continuing to cut taxes will only undercut our ability to invest in people and communities.”
As a result of the legislature’s reduction of the corporate tax rate from 6.9 percent in 2013 to 3 percent in 2017, the state has taken in $600 million less in taxes. That hurts, for one thing, our ability to educate our children. It’s difficult to accept further corporate tax cuts when our schools are suffering from a lack of resources.
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The report also notes that previous cuts may not have been as beneficial as they were portrayed. North Carolina’s job-creation record — 77,200 private-sector jobs since April 2017, up 2.1 percent — “is virtually indistinguishable from the average growth rate for the South Atlantic region, including Florida, Georgia and South Carolina, none of which have engaged in a rash of tax cuts in recent years.”
Many economists say much of North Carolina’s recovery has come from piggybacking on the U.S. recovery.
The report also notes that previous tax cuts, including last year’s federal cut, have failed to “trickle down” to workers. Forty-six corporations devoted at least 51 percent of that cut to shareholders — and some, such as Bank of America Corp. and Wells Fargo, more than 90 percent. Bank of America Corp. has dedicated only 8 percent of its cut toward its employees, and Wells Fargo 1 percent. To their credit, 31 percent and 4 percent, respectively, is going toward community philanthropy.
There’s no denying that North Carolina has benefitted in some ways from the legislature’s tax cuts. North Carolina “has performed the trifecta of state fiscal management in recent years — cut tax rates, increased spending but at a frugal rate, and fully funded the rainy-day fund,” Michael Walden, an economics professor at N.C. State University.
But with a vigorous corporate environment, perhaps it’s best to put the focus on our citizens’ needs now. Gov. Roy Cooper has proposed freezing additional corporate tax rate cuts, as well as those for individuals making more than $200,000 annually, to pay for an 8 percent average raise in teachers’ salaries for the 2018-19 school year. That seems a much better investment.
It’s typical to grumble over taxes. But, as Supreme Court Justice Oliver Wendell Holmes Jr. said, “I like paying taxes. With them, I buy civilization.”With our taxes, we buy police and fire protection, safe roads, economic development, schools and social programs that help those who need assistance, among other societal goods.
Corporations aren’t going to pay for our roads or our schools with their tax-rate cuts.
Even if we only consider our schools, which are seriously underfunded, they should take priority over another corporate tax rate cut.