Democrat Gov. Roy Cooper issued a warning at last week’s North Carolina Press Association Convention in Raleigh about the future of the state’s economy.
He said that despite the overall economy and job growth being good, North Carolina has missed some “amazing opportunities” when it comes to the corporate tax rate being cut.
“Our Budget Office (NC Office of State Budget and Management) predicts that things have begun to even out, and a lot of it is because of the tax money that is going to the wealthiest,” he said. “I’ve had not a single CEO complain about our corporate tax rate, which is 2.5%, which is the lowest in the 40 states that have a corporate tax rate, but that shouldn’t even be an issue. What you’re going to see is the money is not going to be there to make the investments that are needed in this growing state, the third fastest growing state in the country.”
“It’s richly ironic that Gov. Cooper claims not a single corporate CEO complains about North Carolina’s corporate tax rate, but he has authorized countless tax handouts to some of the world’s largest corporations, including nearly a billion dollars to Apple,” Brian Balfour VP of Research at the John Locke Foundation told Carolina Journal. “He also granted a handout to Vietnamese startup company VinFast valued at up to $1.3 billion.”
He added that North Carolina’s strong financial footing can be attributed to its aggressive tax cutting over the last dozen years, which has made the state a more inviting place for investment and job creation.
“Combine that with the fiscal restraint of limiting annual budget increases, and North Carolina has built up saving reserves to all-time highs and has been running annual surpluses in the billions,” Balfour said.
Cooper said he loves tax cuts for the middle class and would love to restore the earned income tax credit, but things like private school vouchers and tax cuts for the wealthy and corporations aren’t needed.
“Cooper’s desire to reinstate the Earned Income Tax Credit would largely be a handout,” Balfour told CJ. “Thanks to North Carolina’s sizeable state income tax deduction, most – if not all – people who would be eligible for the EITC would already owe no state tax.”
Rep. Stephen Ross, R-Alamance, who also serves as chairman of the House’s Finance Committee, told the press that the General Assembly has worked hard over the past 12 years to establish a solid footing in place with its tax policy, and although it doesn’t come without challenges, including rising healthcare and pension costs, the state is in great shape because it is starting from a position of strength.
As the chair of the House Finance Committee, he said he tries to look ahead and uses not just analysis from the GA but a lot of outside analysis because that is what he has done as a financial advisor for the past 40 years.
“We will work hard in finance to try to continue to make sure that our numbers are correct,” he said. “We want those numbers to be transparent and continue to keep on solid footing financially and economic development-wise.”
Ross said that North Carolina has positioned itself well over the last couple of years with all of the economic development going on, from manufacturing jobs that have come here from the North and the West; to population growth, which in turn gave the state another congressional seat and the great relationships that the state has developed with other countries.
“I was recently in Taiwan for about eight days, and we met with business leaders and government leaders, and everywhere we went, somebody mentioned North Carolina,” he said. “We’re doing business with North Carolina, we want to do more business with North Carolina, and some people from the other states came into the room and asked what are you guys doing? In North Carolina, we made a decision when we wanted to get involved with international business, you can’t just post to the website for the company or the industry in either Europe or Asia. You gotta put people over there speaking the language, know the people, know the business environment and how to get in and talk to them, and we did that.”
But all of the growth does come with its own challenges.
He commented that it took him 90 minutes to get from Burlington to Raleigh for the convention, whereas twelve years ago, it would have only taken about 50 minutes.
Ross stated that although the state has put a lot of resources into things like transportation and building as fast as possible, legislators need to take a serious look going forward so the state doesn’t fall far behind.
“I think where we are now, we need to put some brakes on what we’re doing,” he said. “We’re running behind the curveball with some infrastructure, including state government infrastructure. We’re hitting the point where we’re not going to be able to keep pace unless we do spend additional funds. So in order to do that, we’ve got to kind of put the brakes on some of these tax increases and really take a look at what we are facing going forward, and then take that and try to turn that into policy.”
“Rep. Ross raises some valid concerns about North Carolina’s ability to expand and update its infrastructure in light of a growing population,” Balfour said. “This could be addressed by redirecting resources away from pork projects and corporate welfare and toward fast-tracking the needed infrastructure of our growing state.”