BTC BRIEF: Empty Promises - Income Tax Cuts A Poor Strategy for Boosting the Economy

By Alexandra Forter Sirota
Budget & Tax Center Director
May 2013

Income tax cuts are a poor strategy for producing economic growth, despite the claims of North Carolina policymakers who are advocating deep cuts to the state’s income taxes. This has been amply demonstrated by experience with income tax cuts at the state and federal levels and decades of careful research that has found no link between state personal income tax levels and economic growth. Instead, income tax cuts – particularly for high income households -- contribute to rising income inequality and drain resources from schools, health care, public safety and other ingredients of a strong, durable economy.

A sound tax reform plan should ensure that low- and middle-income taxpayers don’t carry more of the tax load and that investments in schools, health and public safety can be sustained over time. Income tax cuts like those currently being considered would only make these goals harder to achieve.

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