MEDIA RELEASE: Claims that state tax increases cause job loss are unfounded, report says

Raising revenue preserves jobs, keeping North Carolina on equal footing with peer states


RALEIGH (Aug. 27, 2009) -- Far from costing jobs, the tax increases passed by North Carolina's legislature are likely to forestall job losses in both the private and public sectors, a new study by the North Carolina Budget & Tax Center finds.

Claims that state tax increases cause unemployment to rise are "based on a highly flawed methodology," the BTC Brief argues, and the most credible research suggest that "tax increases will not hurt the private-sector job market."

By preventing cuts in state programs, the report argues, the $1.3 billion revenue package will also prevent job loss both directly (by preserving state jobs) and indirectly (by preserving capital flow that stimulates the economy.

Also, worrying about job loss in North Carolina due to tax increases ignores the fact that other states are also enacting tax increases - meaning that North Carolina's tax levels relative to its peers will remain unchanged.

The report's key findings:

  • North Carolina's recently enacted state tax increases are small relative to the size of the state economy. Moreover, the fact that other states are also enacting tax increases should leave North Carolina's tax levels unchanged relative to its peers.
  • Claims that state tax increases cause job loss are based on a highly flawed methodology; examination of credible research suggests the tax increases will not hurt the private-sector job market..

The report, "Wishful Thinking: Claims That State Tax Increases Cause Job Loss Are Unfounded," is available online at http://ncjustice.org/?q=node/368

FOR MORE INFORMATION, CONTACT: Dr. Stephen Jackson, Budget & Tax Center, steve@ncjustice.org; (919) 856-2151


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