Press "Enter" to skip to content

North Carolina Joins South Dakota, Kansas in Refuting GOP Tax Plan Rationale

The United States is rife with empirical counterexamples to the voodoo economics that Donald Trump, John Thune, Mike Rounds, and Kristi Noem are peddling to sell their tax cuts for the rich. South Dakota epitomizes the Republican low-tax/no-tax, favor-the-rich approach, and we struggle to recruit workers, raise wages, and generate enough tax revenue to support our stingy state budget. Kansas went whole hog on Republican tax cuts and famously busted their budget with no concomitant economic boom. (Tax-cutting governor Sam Brownback leaves office telling his fellow Kansans to pray and fast.)

Republican-run North Carolina has fared better than Kansas since cutting taxes in 2013, but the state budget and schools are under strain, with no unique economic boom:

The tax changes in North Carolina haven’t produced the fiscal calamity that led Republican legislators in Kansas this year to reverse dramatic cuts they passed a few years earlier, but nor have they produced the kind of win-for-all economic prosperity national Republicans say their effort will spur.

Instead, North Carolina has enjoyed the same steady growth as much of the country, making it challenging to estimate the impact of the tax cut compared with the many other factors shaping the state’s economy.

“There’s nothing magical that has happened in North Carolina,” said John Quinterno, an economic analyst at the Chapel Hill-based research group South by North Strategies [Todd C. Frankel, “What Happened When North Carolina Cut Taxes Like the GOP Plans to for the Country,” Washington Post, 2017.12.03].

Republicans have to shout extra loud about their voodoo economics, because they have to drown the facts: tax cuts do not drive economic growth to levels sufficient to justify the heightened difficulty of providing public services and balancing public budgets.


  1. Rorschach 2017-12-04 10:06

    South Dakota is an austerity state. To the powers that be, austerity is a reward in itself. Economic development is really a secondary hope ranked far behind the number 1 goal of government austerity. Meanwhile, Minnesota levies higher taxes but uses them to support a much more vibrant economy and actually runs budget surpluses while providing higher social benefits to its citizens. Compare South Dakota’s economy to Minnesota’s economy to see which model works better.

  2. Vance Feyereisen 2017-12-04 12:24

    There is an argument made that it is higher taxes that actually drive investment. Rather than give the money to the government entities will invest the money.

  3. Rorschach 2017-12-04 13:16

    I never thought of it that way, Vance, but it makes sense.

  4. Darin Larson 2017-12-04 13:17

    Vance Feyereisen, Farmers often practice this form of tax avoidance through investment in business assets and inputs. Rather than “showing” more income and thus paying more in taxes, farmers are notorious for year end investments in machinery and equipment that can offset income. There is a lot to be said for this theory of tax avoidance.

  5. Cory Allen Heidelberger Post author | 2017-12-04 17:03

    Excellent, Vance! Yes, as Darin suggests, all that year-end tractor-buying has to be good for Main Street Redfield and Webster and DeSmet. Plus, put that money in government hands, and government can’t sock it away for shareholders; government pretty much has to turn it around to spend on its employees and purchases.

Leave a Reply

Your email address will not be published.