BTC REPORTS: Choosing What Works - Let's Build an Innovation Economy for All

By Patrick McHugh
Economic Analyst, Budget & Tax Center
July 2015

North Carolina faces an important choice about which path to choose to create jobs and strengthen the state’s economy.

One path centers on Governor McCrory’s oft-stated aim to make the state a research and commercial hub that can rival California’s Silicon Valley in California and Boston’s Route 128 corridor. The other path would make North Carolina’s key selling points low taxes and lax regulation. So the question becomes will North Carolina’s "business model" be to compete on quality or on price? The answer will say a lot about what kinds of opportunity the state offers businesses and residents in the years to come.

Governor McCrory has called for North Carolina to become the third "vertex of innovation" in his State of the State address and other public appearances. Of course, he is not the first leader to see a place for North Carolina in the tech-driven innovation economy. The Research Triangle Park is one of the closest analogs to Silicon Valley and the Boston area that the south has to offer. The Governor’s proposals would build on decades of public investment in education as well as partnerships between research institutions and the private sector.

Meanwhile, the state continues to reduce taxes. For those who favor this as a strategy for economic growth, the 2013 tax cuts were only the beginning. If we really want to outdo our neighbors, the argument goes, we need to keep slashing income taxes – especially for the wealthiest North Carolinians – and asking less of large, profitable multinational corporations when it comes to paying for public services. The budget proposed by the Senate this year extends this line of thinking, offering particularly generous tax cuts to large corporations.

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