Report: Tax hikes don't mean job losses


The N.C. Justice Center says that tax increases approved by the legislature this year are likely to prevent job losses in the private and public sectors.

The Center issued a release on a new report that contends that the popular notion that tax increases will lead to job losses is not true.

The report says that without the tax increases, deeper cuts would have been made in state services such as education.

"Those cuts certainly would have caused job losses in both the private and public sectors, while credible research concludes the revenue increases likely will not negatively impact the job market," reads the report.

The report says that North Carolina's tax increases are equal to a small fraction of the state's economy and do not put North Carolina out of line with taxes in other states. As a result, the report says, the tax increases should not put North Carolina at a competitive disadvantage with other states when it comes to jobs.

Finally, the report says that a comparable set of tax increases by North Carolina in 2001 did not have a negative impact on the state's economy.

The report concluded:

Taking a balanced approach to addressing the budget shortfall allowed the state to avoid major setbacks in public programs and avoid laying off tens of thousands of state workers, which would have had negative effects on the state economy.

Update: Well, it didn't take long for the other side to chime in. The folks at the Civitas Institute have posted a response to what they call a "bizarro-world 'analysis."

The Civitas post says the Justice Center report "does nothing to bolster its claim that higher taxes have no effect on job growth. Any basic Econ 101 theory will describe how job and economic growth is based largely upon the accumulation and investment of new capital and the proper incentive structure."

The post says that increasing taxes reduces the amount of capital available for invements and "destroys the incentives for entrepreneurs to engage in productive investment."

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Re: Report: Tax hikes don't mean job losses

Mr. Jackson -
First of all, your bio is on ncjustice.org - looks like you have a MA (masters in what?) from the School of Journalism at UNC-CH, & a PhD (in what?) from the Dept. of Gvt at Cornell. And you've done consultant work for labor unions & performed collective bargaining studies. Why not share with us the subject of your degrees?

Secondly, your 2-page brief cites 2003 research from Arizona St. Univ., stats from the IRS & Census Bureau, & research from the NEA - well of course the NEA will be pro-tax. Would you cite research from the NC Pork Producers Assoc'n to push an agenda to eat more pork? No, didn't think so.

I'm confused - in your comments you refer to Nobel prize winners & the head of the OMB. I don't see any such references in the brief. I must be missing something - please clarify. Thank you.

Re: Report: Tax hikes don't mean job losses

That civility and a focus on the battle of ideas, so core to democracy, should be so marginalized of late by some on the right causes me as much concern as does any direction of policy, be it health, state taxation or foreign. No doubt some liberals have also joined that damaging trend and I am aghast at that, too.

While I am tempted to answer the aspersions from Mr Balfour about my economics training, it suffices to say that I do not know him and he certainly knows nothing about me or my education in economics.

If you read the analysis in the Brief - that it is better for state governments to increase taxes in order to maintain government-sponsored employment during a recession because 100% of the money is spent in-state - you will notice that this view is held by some pretty heavy-hitter economists, including Nobel Prize winners and the current head of the Office of Management of the Budget. Hardly bizarro. The idea is mainstream. The overwhelming majority of state governments through their actions to raise more revenue during this recession clearly agree.

Re: Report: Tax hikes don't mean job losses

What drivel. Why would such a report even get visibility here?

Let's see who's on the Board of Directors:

Rev. William Barber, head of the NC NAACP; Gene Nichol, HA!!!; Orage Quarles, publisher of the N&O; and the usual assortment of lawyers & people who are employed by non-profits. Duh, they have a vested interest in perpetuating the same tired Democratic high-tax gvt structure, where citizens, directly or indirectly, have their tax dollars used to fund these non-profits in the form of grants & contracts. Can you say "self-serving"?

Hey, I think I'm going to start a non-profit, fund it with tax dollars, then manufacture a report that argues for high taxes. Brilliant!

Re: Report: Tax hikes don't mean job losses

@scharrison

"you're not only engaging in the same tired, inflammatory, sophomoric, and fear-mongering rhetoric"

You mean like "tea-bagger"?

FAIL.

and the folks with the Obama as Nazi posters at the townhalls are LaRouche backers and are about as right-wing as you are... http://www.larouchepac.com/

Re: Report: Tax hikes don't mean job losses

The folks over at the N.C. Justice Center are more than capable of defending themselves, but I do have a few things to say to Mr. Balfour:

First off, by categorizing NCJC as "an outfit driven by Marxist ideology" in your introductory sentence, you're not only engaging in the same tired, inflammatory, sophomoric, and fear-mongering rhetoric exhibited by pundits and tea-baggers with their "Obama is a Nazi!" drivel, you also started out your little hit piece with the dual logical fallacies of Argumentum ad hominem and Argumentum ad populum.

Now, I will freely admit that there are precious few issues that we can even come close to agreeing on, but, as I've said before, you guys are a pretty smart bunch. When you find yourself tempted to use language like the above, you need to consider what that can do to your overall image. Make no mistake, it would suit me just fine if the rank and file in the General Assembly, especially the Democrats (hint hint), chose to ignore the "product" coming out of JLF/Civitas. Keep going down that road and you'll find yourself where you should be, on the outside trying to look in.

As far as "Statism vs Entrepreneurship" issue, you're casually overlooking some pretty important factors. Not only do many entrepreneurs actively seek State (and Federal) contracts, a lot of them wouldn't have even sketched a rough outline of a business plan in the absence of those contracts. As a matter of fact, most (State, anyway) government contracts address issues like infrastructure and education, meaning much of those lucrative projects that entrepreneurs salivate over wouldn't even exist in the strictly private sector. If any of you real entrepreneurs are interested, here's some guidelines (pdf) for you.

While there is some merit to the "tax hurts the bottom line which discourages investment" angle, to ignore the economic reality of the State being such a huge consumer of goods and services from the private sector leaves such a gaping pothole in your bottom-line analysis that it simply must be discarded as irrelevant. Your deep-seated dislike and disdain for government is a handicap, although you probably can't see it.

Now, see? You don't have to use hyperbolic crutches like "Marxist" to engage in debate. I went through that whole thing there without mentioning Puppets or Free Market Funda...okay, I just mentioned them, but it doesn't count because I was already done. ;)

Re: Report: Tax hikes don't mean job losses

I can think of several other opinions I might value more on the subject of jobs rather than the N. C. Justice Center.

For example, what does Elizabeth Edwards have to say?

Re: Report: Tax hikes don't mean job losses

Wow! What a shocker!!

A lefist-statist special interest group that suck off taxpayer dollars is applauding the budget that was created by the politicians they bought with that same taxpayer money.

How about you guys tell everyone what the NC Justice Center really is, what they really want, who backs them, and who they back.

After that ask small businesses how the tax and fee hikes will work for them? If they can stay in business, how many will they hire? Or with all the private sector unemployment, salary cuts/freezes and furloughs, how much people will really spend? Do you REALLY think that raising the sales and income taxes will entice people to spend more?