WSJ: Stein dead wrong on taxes

Taxes are on a lot of people’s minds right now. (We’re pretty sure Mark Robinson is not in the mood to broach that subject right now.)

Americans from Murphy-to-Manteo and from sea-to-shining-sea are hurting financially.  Letting them keep more of their hard-earned money is one real good tactic for soothing some of that hurt.  General Assembly Republicans have attempted to address some of that with tax rate reductions, while Democrats and their 2024 gubernatorial nominee Josh Stein are trying it with a bit of class-warfare flavor.   The Wall Street Journal has decided to sound off on Raleigh’s tax talk:

Both parties have aided North Carolina’s march toward lower tax rates, but the road will fork in November. The Democratic nominee for Governor wants to restore a narrow taxpayer giveaway, instead of accelerating the path to low income-tax rates that have lifted the overall state economy.

In his first move after winning the Democratic nomination this month, Josh Stein announced a major campaign theme: the “working families tax cut.” He explained his vision in a short speech at a day-care center. “North Carolina’s economy is strong and growing, but not everyone is benefiting from that growth,” he said. His plan would return $520 a year to an average qualifying family.

The proposal has populist appeal, but there’s a catch—those savings are only for residents who pay little tax to begin with. Mr. Stein wants to revive North Carolina’s earned-income tax credit (EITC), which boosts tax refunds for filers who earn less than about $50,000 a year. Many recipients paid nearly zero income tax and still receive annual payments from the state. The program could cost the state more than $465 million a year, according to data from the left-leaning Center for Budget and Policy Priorities.

That’s why Republican lawmakers rallied to end the state EITC in 2014, and they’re still firm on the issue. […]

The clash is part of a growing nationwide split over the best way to reduce taxes. From 2007 to 2014, North Carolina was one of about 27 states to offer an EITC. The Tar Heel State has since joined a different club—the 25 states, mostly in the South and West, that have cut income-tax rates, often including the top marginal rate. Proponents on both sides promise wage growth and job opportunities for low earners, but it’s worth comparing the records.

North Carolina has cut its income tax in several rounds in the past decade—from 7.75% in 2013 to 4.5% today and 3.99% starting in 2026. That’s transformed the state from a high-tax outlier to the belle of the ball among regional contenders like South Carolina (6.5%) and Virginia (5.75%). It also reduced its corporate tax rate to 2.5% from 6.9%, and it will drop to 1% by 2028.

Contrary to Mr. Stein’s claim, the results have had broad economic benefits. The state’s total nonfarm employment has grown 22% since 2014, compared with 15% nationwide. Warehousing and healthcare services were among the fastest-growing fields, and labor competition has driven up pay. Real median earnings rose 9% from 2013 to 2021. The state fisc has also remained healthy as revenues continue to flow in despite predictions of doom from opponents on the left.

A similar trend has played out across the South, where thriving business climates have boosted wages without help from taxpayer credits that favor only a few. States like New York and New Jersey with high tax rates and other anti-business policies continue to show slower growth since 2010, and state subsidies do little to make up the lost ground.

Politicians like to carve up the electorate and businesses for specific tax favors because it puts them in charge. Mr. Stein wants to play this tax redistribution game, but voters can see the good results from cutting tax rates for all.