Carolina Journal News Reports
RALEIGH — North Carolina needs a new partnership between the state and local governments to restart its economic engines and facilitate growth, an author and investment advisor said Monday at a John Locke Foundation luncheon.
There has been too much emphasis on business incentives for companies that do not reinvest in North Carolina and who bring with them only low-wage jobs, said Tom Vass, president of the Corporate Investment Center. The state should develop small businesses, promote high-skill training, and create a new financial infrastructure in order to create self-sustaining economic growth, he said.
North Carolina’s metropolitan areas are missing four important pieces to their economies, Vass said. They need a regional e-commerce trading platform, a web securities exchange, a regional closed and capital growth fund, and a regional entrepreneurial association that helps unemployed workers find new, profitable jobs, he said.
There is a body of evidence of North Carolina’s economic failure, Vass said. North Carolina has the highest marginal tax rates on income, investment, and capital gains in the Southeast. The state’s per-capita income has stagnated, with the growth rate less than the national average. The number of individuals living in poverty has increased by more than 20,000 in four years. The state’s unemployment rate has increased from 3.5 percent in 1998 to the current 6 percent, Vass said.
The Lee Act was part of the problem, Vass said. From 1997 to 1999, tax shifting for politically favored companies have cost North Carolina dearly. The companies have already taken $87 million and will take $780 million in the future under the current laws, he said.
Current laws have failed to foster a healthy economy, Vass said. North Carolina is overly dependent on manufacturing in a global economy where manufacturing is less profitable. North Carolina’s current strategy exports profits from low-wage jobs without helping people to reinvest in new ventures, Vass said. The only people who benefited from these policies were a few powerful state senators, N.C. Department of Commerce agents, and politically favored bankers and industrialists, Vass said.
The government can remedy the situation by letting local and county governments keep their revenue and by providing local elected officials with tools and resources they need to stimulate local economic growth, Vass said. The state also can create regional private-sector resources that will increase the supply of capital for native businesses. And, the government can provide tax incentives for local businesses to offer high-skill training in scientific and technical occupations, Vass said.
There are several components to Vass’s proposed economic strategy. The state should provide resources to local leaders and give them the authority to make and implement economic policies for their regions, Vass said. There should be a greater focus on free enterprise and less government intervention, consisting of less taxation at the state level and a less complicated, fairer tax code, Vass said. There should be more thoughtful, strategic use of university research and development to stimulate economic growth, Vass said.
Vass called for political reform based on these principles: “more citizen control, equal rights for all, special privileges for none, less government, and more free market competition.”
Ashley is an editorial intern at Carolina Journal.