BTC BRIEF: A Pathway to Poverty - 3 Reasons Why Tennessee is a Bad Role Model for North Carolina's Economic Future

By Allan Freyer
Policy Analyst, Budget & Tax Center
June 2013

In the current debate over tax reform, legislative leaders frequently hold up Tennessee as a role model for improving North Carolina’s economic competitiveness and ensuring future prosperity. But a look beneath the surface reveals that the Volunteer State has the wrong kind of economy to emulate—Tennessee models a pathway to poverty, not a pathway to prosperity.

  • Tennessee’s economy is not performing as competitively as advertised, either in job creation or economic growth.
  • The jobs created in Tennessee are almost entirely in low-skill, low-wage industries that have kept poverty higher and household incomes lower than in North Carolina.
  • Low- and moderate-income families in Tennessee pay a larger share of their income in taxes than the wealthiest state residents, aggravating inequality in the state.
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