taxes

Economic growth has given the General Assembly $2.4 billion more to spend. Higher sales and income taxes have contributed to this surplus. The Senate adds $1.4 billion in new spending, and relies on nonrecurring revenues for $400 million in new recurring obligations. Drawing on the John Locke Foundation’s Freedom Budget 2005, this paper offers an alternative budget that would end the sales tax and income tax increases from 2001, eliminate Medicaid’s burden on counties, and keep spending growth to 4.3 percent – all within the limit of population growth and inflation.

Gov. Mike Easley’s proposed $18.9 billion budget does not provide enough relief to taxpayers who made it possible. The governor could have returned the $1.1 billion in overcollections to taxpayers without jeopardizing future fiscal health. This would include ending the half-cent sales tax and 8.25 percent income tax rate set to expire in 2007, and providing a temporary quarter-cent sales tax refund. Removing the county burden for Medicaid would also ease the fiscal pressure local governments face to raise taxes to pay for schools and roads.

Gov. Mike Easley’s proposed state budget takes advantage of a $2 billion surplus to increase spending by $1.6 billion, according to a preliminary analysis by the John Locke Foundation.

RALEIGH – More than 60 percent of Wake County voters would reject a school bond referendum that triggers a tax increase, according to a new poll commissioned by the John…

RALEIGH – North Carolina leaders should avoid turning a one-year state revenue surplus into a long-term budget nightmare. That’s the new warning from a John Locke Foundation fiscal policy analyst.

State tax revenues grow in strong economies. Politicians use the new revenue to create or expand government programs. In recessions, revenues fall and tax rates rise to pay for the higher level of spending. Spending and taxes in the last ten years illustrate this pattern. As North Carolina enters another period of expanding revenues, Gov. Mike Easley and the General Assembly must avoid the temptation to increase spending so they do not have to increase taxes in the next recession.

North Carolina’s tax code distorts economic activity. It penalizes the investment, savings, and entrepreneurship needed for economic growth. But the latest report on taxes from the Department of Revenue only looks at ways the tax code does not bring in as much money as it could.

RALEIGH – As North Carolina policymakers and analysts prepare for a major debate on reforming the state tax code, a new report from the John Locke Foundation calls into question…

City and county government cost on average $3,804 per capita in Charlotte during fiscal year 2004, from July 2003 to July 2004. This was 28.1 percent higher than the $2,969 (constant 2004 dollars) per capita spent in fiscal year 1994. For comparison, real per capita personal income increased just 13 percent over the same period, from $24,926 to $28,235. Most of the increased expenditures were for operations, which climbed 23.2 percent to $2,766 in fiscal 2004. Char-Meck’s high capital spending climbed 43 percent over the decade, to $1,038 in fiscal 2004.

Senators deserve a great deal of credit for decisions in their proposed budget to limit dual eligibility for Medicaid and Medicare, reduce the number of teacher assistants in public schools, and remove General Fund support for some activities that should rely on receipts. These changes do not reflect an overall return to fiscal reationality, however. The Senate still increases spending by $1 billion, paid for with fund transfers and big tax hikes.