This week’s “Daily Journal” guest columnist is Chad Adams, Director of the Center for Local Innovation and Vice President of Development for the John Locke Foundation.
Nothing breeds complacency like success. And by the looks of things, North Carolina is an astounding success. In Raleigh, due to legislators’ reaction to a perceived fiscal crisis, the state is now awash in funds – $2 billion more than the planners anticipated. Wonder if those folks get graded for accuracy?
Nevertheless, there’s been little discussion about reforming the tax code, helping local governments end their Medicaid mandates, or lowering taxes and simplifying government.
Why should we care? In simple terms, $2 billion equals more than $300 for every working-age adult in the state. This is the perfect time for true leadership to shine. It is the time to revamp our tax codes to reflect the fact that we are no longer the farming society of the 1930s.
It is the perfect time to end the mandate that forces North Carolinians to pay for Medicaid at the county level. (We’re the only state in the nation with that mandate.) It is the perfect time to review the efficacy of the hundreds of state government programs to determine if they work or not.
Ending ineffective programs could free up millions to promote and assist more effective programs across the state. Now is also the perfect time to consider merging departments in North Carolina, like Virginia did half a decade ago. Cutting bureaucracy saves money!
There hasn’t been a better time in decades to exert positive leadership to make North Carolina the easiest state in which to create and build a business. Let’s examine our current tactic. We’re so ashamed of our tax codes that we have to lure folks here by cutting their tax rates in the form of incentives.
Creating a more proactive business climate encourages existing companies to expand and potential entrepreneurs to start up in North Carolina. According to groups like the National Federation of Independent Business (NFIB), 85 percent of new jobs come from small businesses. If we want new jobs, we should make it easier to create them by cutting some red tape.
While we contemplate that option we are bombarded with ethics-related problems. Speaker Black has video poker, fundraising, and lobbyist woes. The President Pro Tempore of the Senate has ties to the former ferry division chief who’s heading to a federal trial. The governor has demonstrated a wonderful ability to buy land at below-market rates and to help his donors make money with DMV offices and a marina deal. All of these serve only to distract us while nothing really changes in our state government.
And then there’s the issue of education. After almost 14 years of “educational governors,” are we any better off? We’re not at the top of the educational ladder in terms of graduation rates, student performance, test scores, or any real measure of success.
We need more opportunity for education to perform. That could take the form of charter schools, home schooling, public-private partnerships, and a host of other possibilities – including more year-round schools. And while the state is awash in cash, county school systems are struggling to build schools as construction costs outpace inflation.
In truth, the surpluses (remember, it’s your money) are due, in large part, to national tax policies. Many states have extra cash this year. When the capital gains rate was cut from 20 percent to 15 percent, revenues from capital gains increased by 85 percent. Yep!
In other words, when the tax rate went down, folks started moving money around in the system, which in turn generated far more revenue. The leadership in North Carolina should pay attention. Having one of the highest personal income tax rates in the nation is no source of pride. Cutting that rate is a good idea!
Leaders should step up and challenge the status quo in North Carolina. It is a potential opportunity that doesn’t happen often. Streamlining government, enacting a revised tax system, and creating the most business-friendly climate in the nation would restore us to national prominence. We would be admired for our forward thinking. Leadership is about vision. Right now, it appears that the legislative leadership needs a vision exam worse than kids entering grade school.