Taxes, jobs, and the NC Legislature

So, the Republicans in charge of the NC legislature asked for an analysis of how many jobs would be created by dropping a temporary $.01 sales tax (which, actually goes a huge way towards plugging our budget hole and would help avoid massive cutbacks in education) and the UNC Center for Competitive Economies estimated this could lead to about 19,000 new jobs over two years (along with a few other tax cuts for rich people and corporations).  NC Republicans have been brandishing this number as the basis for their cuts in education, health and public welfare, etc.  Here’s the thing, they specifically did not want an analysis of how many jobs would be lost from the cutbacks in state spending.  I’ll let Chris Fitzsimmon provide the details:

A new report released by the N.C. Budget and Tax Center shows the budget would cost North Carolina more than 30,000 jobs next year, $1.3 billion in lost wages and $2.8 billion in reduced industry output…

Then there is the study’s methodology, the exact same one used by researchers in a report prepared for legislative leaders earlier in the session that showed the tax cuts in the Republican budget would create thousands of jobs in the next year.

That study was done by the UNC Center for Competitive Economies but only looked at the tax cuts, not the huge reductions in state spending the budget makes in areas like Medicaid where state investments are matched two to one with federal dollars.

The author of the UNC study noted in a cover letter to legislative leaders that he only looked at one side of the equation, a point never mentioned by House Speaker Thom Tillis and Senate President Pro Tem Phil Berger when they are defending their budget proposal.

The BTC study looked at both sides, the jobs created by the tax cuts and the jobs lost by slashing public investments, and the conclusion is clear. The budget would be a massive blow to the state’s still sputtering economy and throw thousands of people out of work in both the public and private sectors.

A trade only the Republicans would make in their anti-tax mania: a trade of gaining 19,000 jobs for losing 30,000 (many of whom would be teachers).  And, for the record, keeping the $.01 sales tax is quite popular among NC citizens of all political stripes.  Boy, life (and politics) must be easy when you only want to look at the benefits of your proposed actions and ignore the costs.


About Steve Greene
Professor of Political Science at NC State

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