In December, my colleagues and I put together a Roadmap to Freedom in preparation for the 2017 legislative session. It outlined in short-form our goals and objectives. It talked about where we would put our resources and was meant to serve as a guide to our principles and priorities. Freedom isn’t just an ideology.
It’s an objective measure. Economic studies show that when there’s more freedom, populations enjoy greater employment and higher incomes. Freedom empowers. Freedom matters. Extensive research shows economies less restricted by government interference are freer. Free economies rely on personal choice and free markets to respond to questions: What’s produced, how much, and for whom? According to the Fraser Institute’s Economic Freedom of North America 2016 Index (using 2014 data) North Carolina is tied for 13th among states. Fraser uses 10 components in three areas in ranking economic freedom: Government spending, taxes, and freedom in the labor market.
North Carolina has had transformational tax reform since 2013, reducing the tax burden for each family, consumer and business. The 2017-19 budget gives $530 million in tax cuts. It reduces the flat personal income tax rate and increases the standard deduction, ensuring 99 percent of state taxpayers pay less. The corporate tax rate is lowered while many loopholes and carve-outs are eliminated, making for a simpler, fairer tax on business.
But government spending is actually a better measure of economic freedom. As government grows, the room for free exchange is squeezed. Lawmakers have reined in government spending in every budget cycle since 2011, keeping growth at or below the growth of inflation and population. The 2017-18 budget limits growth to 3.1 percent. Measures of entrepreneurship and regulations of the labor market are key components of economic growth. Removing barriers to growth, such as allowing distillers to sell their product directly to customers — and from one bottle to five — gives craft distillers a chance to grow and encourages entrepreneurship. But pro-business isn’t necessarily pro-market.
When subsides and targeted incentives are introduced, the market becomes less free and increasingly subjected to the irregularities of special interests. The heavily subsidized solar industry is an example of a woefully distorted market. The goal of energy policy should be lowcost available energy, as opposed to propping up an unsustainable industry.
North Carolina still gives away billions in targeted incentives but has become more transparent in a movement toward grants, instead of imbedded tax credits, and more accountable. Regulations impact freedom. When professionals are limited in practicing within their full scope of expertise, freedom and economic opportunity is limited. When regulations raise the cost of health care, limiting access and quality, freedom to choose is restricted. States that allow more freedom through regulation parlay their resources into greater economic benefits.
Texas, through fewer regulations, allows its oil industry to thrive. It’s No. 2 in Fraser’s index. North Carolina eliminated a moratorium on fracking, imposed more reasonable regulations, and stands ready to respond when the market shifts. Freedom-limiting public policies create a society of good and bad people. Calls go out for government intervention to protect the good from the bad. When economic polices hurt one group to punish or reward another, it creates a divisive society and everyone suffers. Freedom isn’t just an idea. It’s measured, and its impacts on prosperity are clear. Freedom is empowering and powerful.
As economic freedom grows, conditions get better — for women, for those in poverty, for entrepreneurs. Economic freedom means more prosperity for all. Because we know human flourishing is the outcome of economic freedom, my colleagues and I have worked tirelessly during this legislative session to set North Carolina steadfastly on that path to freedom. Our work continues, and we’ll get there. We have the Roadmap to Freedom.