Saturday, September 22, 2007

A Conservative’s Viewpoint
Stimulating Job Growth In North Carolina

Article by Bob Steinburg - Edenton, North Carolina: Cradle of the Colony

There are many wonderful things about North Carolina, but its job growth and tax climate are not among them. This is not an aberration. It has been a downward trend for many years. And that is not a good sign for our economic future.

Because of our high taxes, the Tax Foundation, a nonpartisan Washington, D.C., think tank, ranks North Carolina near the bottom – 40th – in our ability to attract businesses. Neighboring states of Tennessee, South Carolina, Virginia and Georgia have significantly lower taxes - ranked from 13th to 26th in their ability to attract business- giving them an edge. We need to close this gap if we are going to compete for jobs.

North Carolina has a 6.9 percent corporate income tax rate, which has to be a consideration when companies consider relocating here. South Carolina’s rate is 5 percent and Virginia 6 percent. This puts North Carolina at an additional disadvantage in the attracting-jobs-to-our-state sweepstakes.

Most of the jobs in North Carolina are created by small businesses whose owners report their earnings as personal income and at those levels generally pay an 8.00 percent state income tax, the eighth highest nationally and far exceeding any other state in the Southeast. The ugly truth is that the North Carolina General Assembly is controlled by a handful of legislators who dictate what legislation will be heard and what programs will be funded. They decide how the money is spent – not the small business owners who should be making those decisions.

Recently, state leaders have been using tax dollars for incentive packages to woo or keep industry here – companies like Google, Dell, Goodyear and Bridgestone Firestone. It gives our lawmakers an opportunity for photo-ops, enhancing their image with the folks back home, but it puts our hard-earned tax dollars in the pockets of corporate giants. Utility companies are also cashing in.

North Carolina Senate Bill 3, passed and signed into law, enables North Carolina energy giants Duke and Progressive Energy to charge electric customers now for all costs {including licensing and permitting} for future nuclear power plants-in North Carolina-and also any other location {South Carolina? Florida? Indiana?} that would supply power to North Carolina service areas. This applies to new coal power plants as well. If a power company chooses to construct a new facility out of state we, in effect, will be paying for it, and a second time when the power is sold back to us. The John Locke Foundation estimates SB 3 will cost North Carolina taxpayers $500 million. A sweet deal for the utilities, but hardly one for the taxpayers.

When government decides who will get our tax dollars, how much, and under what circumstances, we are witnessing big government at its worst. This flies directly in the face of free market principles and fiscal responsibility.
The state not only has an outrageous tax structure, its roads, bridges and water and sewer lines need upgrading or replacing, and our education system is crying out for reform.

There are solutions:
• Eliminate incentive packages, enabling us to cut our corporate income tax by half, or perhaps eliminating it.
• North Carolina has the 14th highest per-person tax rate in the nation. Reduce it all levels, especially at the top, where entrepreneurs are being stripped of significant capital that could be used for expansion and the creation of jobs.
• Create a network of statewide technology high schools, particularly in the east where we have none. These schools can work with business leaders in their communities and around the state, preparing a matrix of study that will better prepare our youth for employment and opportunity, including college.
• Amend Senate Bill 3 to insist that alternative sources of energy plants be constructed in North Carolina, and within a certain timeframe.
• Establish an intense effort to repair our roads and bridges, sewer and water lines.

Higher taxes stifle job creation and expansion, the very things this state and region desperately need. With these changes, we can announce to the world that North Carolina is seriously open for business.

There are some interesting examples of the hostility to free enterprise contained in Bob's numbers above. The most egregious is the comparison between the tax rate on big corporations, 6.9%, and the tax rate on small business, 8%. Since small business generates the bulk of new job growth, traditionally over 80% of it, why on earth would any state with sanity tax small business at a higher rate than big business?

The reality? Big business gives big campaign contributions to the socialist party, the Democrats. The collusion between government and big business is clear. Big business has become the advocate of price controls (monopoly utilities and minimum wage), social welfare (health care coverage and egregious safety rules) and corporate welfare (tax breaks and special subsidies). Big business has become the advocate for socialist practices to drive out competition. It is working. Big business touts capitalism but practices socialism.

Lowering taxes is just one of the issues we need to address. Eliminating the small business penalty would be another good move allowing us to get back to the competition of free enterprise. Competition is the great benefit to society which drives us to a high standard of living with low costs. Competition is what free enterprise is about.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home