RALEIGH – The Democrats have all but abandoned the rhetorical line that taking less of your money out of your pocket via lowered personal and corporate income tax rates will lead to budget holes and fiscal shortfalls. And for good reason; the State of North Carolina just announced another revenue surplus in a long line of revenue surpluses since Republicans took over the purse strings on Jones Street.
The State collected $188 million more in tax revenue than projected over the first two quarters of the fiscal year and the state economy is “experiencing solid growth in terms of both employment and wages,” according to an economic report released Thursday by the state’s non-partisan Fiscal Research Division.
This the sixth consecutive revenue surplus, including a $580 million surplus in May 2017, a $356 million surplus in May 2018, and a $400 million surplus in August 2018.
The report went on to say, “the economy is on solid footing and remains in a stable growth pattern” as historic tax relief and regulatory reforms continued to drive job creation and new investments in the state’s private sector.
Imagine that; the State took less of your money, stopped telling you what you can do with so much, and you put it to work to grow your business, better your lives, and drive prosperity. It’s almost as if that is how it is supposed to work.
More than mere revenue gains, the researchers also predicted “a revenue forecast for stronger wage growth in 2019” and said the surplus suggests the pace for salary gains are ahead of projections in the first half of the fiscal year.
Wage growth has been elusive for years, even as the economy steadily grew and assets, like the stock market, inflated. Now, with years of Republican tax and business reforms settling in on the part of the Old North State, and President Donald Trump slashing regulations and managing to drive a federal tax cut across the finish line with congressional Republicans, those gains have been filtering through to the average worker and business owner.
The reforms to corporate tax rates may be helping that along, as businesses have more cash to invest in expansion and labor. To that point, the report highlights how corporate taxes, the cutting of which was much maligned by Democrats, were a big contributor to the surplus totals.
“Corporate taxpayers are a big reason” for the state’s revenue surplus as corporate income tax collections exceeded expectations by $37.1 million and franchise tax collections were $45.8 million over target, according to the report. Comparatively, the corporate income tax collections were up 16.5% over last year.
While there are a million different variables that drive business cycles, investment decisions, and economic growth, the connection to a more respectable treatment of taxpayers and business owners is an undeniable factor. It is also consistent with liberty.
The legislature is back for a long budget session this spring, and the Republicans are still hanging on, albeit with a weaker hold. A real test of their commitment to respect taxpayers will be if they lower taxes further, and, just as importantly, spend less of our money on everything from wealthy transfers to self-serving pork barrel spending projects.
We’ll be watching.