February 25, 2021

North Carolina has received accolades as the “gold standard for pro-growth tax reform” from another state seeking to follow the NC model as it pursues further tax reform.


In 2018, Iowa’s legislature passed a tax reform bill that lowered individual and corporate income tax rates in an effort to make the state more economically competitive. As a result, Iowa now enjoys $300 million in surplus and $770 million in reserves. And conservative leaders want to do more.

But liberal naysayers warn against going further with pro-growth tax reform, citing the experience of Kansas, which passed tax reform in 2012 and has had budget problems in recent years, blamed by many on its tax reform failure.

The Gold Standard

That’s where North Carolina comes in. The reason North Carolina is viewed as the “gold standard for tax reform in the U.S. is not because of some sort of clever tax wizardry, it’s because the fiscal managers in the Reform Majority in the legislature wisely hold the line on spending.  Read here….

“North Carolina is the gold standard for pro-growth tax reform and has demonstrated that keeping spending levels limited while reducing tax burdens on hardworking taxpayers can lead to greater economic growth and the ability for taxpayers to keep more of their income. In the case of North Carolina, the prosperity that followed tax cuts actually led to multiple rounds of pay raises for public school teachers across the state. ‘The supply-side effects of fiscal policy are real, but they don’t negate the need for spending discipline,’ wrote John Hood, who serves as Chairman of the John Locke Foundation.”

That “spending discipline” is what was lacking in Kansas as it lowered its revenue by reducing tax rates, but then not putting the reins on government spending. Instead of keeping a watchful eye on spending, and cutting waste and prioritizing spending, Kansas’ Legislature “increased spending by more than $430 million in the same year it cut taxes.”

That will get you in trouble.

Examples like that make us appreciate even more the discipline and courage of the Reform Majority in their tax reform efforts. Salutations.