Senior Fellow Joe Coletti has teamed with John Hendrickson of Iowans for Tax Relief in urging Iowa lawmakers to couple their recent tax reform with spending restraint. It’s the fiscal model North Carolina has followed — and which the John Locke Foundation has championed. Writing for the online Des Moines Register, they lay out the reasons that North Carolina is the model for economic transformation.
Iowa cannot borrow or print money like the federal government, which means higher spending translates more directly into higher taxes. Iowans should look to North Carolina to see what is right. North Carolina is demonstrating that lower tax rates and controlling the growth of spending not only leads to economic growth, but also funding the priorities of state government.
North Carolina over the past two decades provides an example of the dramatic difference between higher spending per person and flat or lower spending per person. From 2001 to 2007, spending per person (adjusted for inflation) increased, and taxes followed. Those temporary and permanent tax hikes transferred more than $6 billion from individuals, families, and businesses to the state over 10 years.
Over the veto of then-Gov. Bev Perdue, the new Republican majority in North Carolina in 2011 managed to cut taxes and restrain spending. Legislators have kept budgeted appropriations per person, adjusted for inflation, constant since then. Their restraint, combined with economic growth, has made it possible to provide $13 billion in tax relief to citizens over six years, with another $2.8 billion expected in the next fiscal year, while setting aside more than $2 billion in savings and cash to help weather future budget challenges.
North Carolinians are keeping more of what we earn, thanks to tax reform and fiscal restraint adopted by the Republican-led General Assembly. Let’s keep our fingers crossed that Iowans will enjoy the same freedom and economic opportunity.
