New at the Civitas Institute’s main page is my article discussing tax reform for North Carolina. The Charlotte Business Journal published a similar version of the article in this week’s edition (paid subscription required to see the whole article).
Here’s a sample:
It’s no secret that North Carolina legislators will take a serious crack at reforming the state’s tax code in 2013. Which leads us to the question: What tax structure will impose the least destruction on North Carolina’s economy, and enable it to once again become competitive?
Economists have provided abundant research on the topic, and have largely formed a consensus: Income taxes are the most harmful to a state’s economic growth, while the sales tax has the least negative impact.
The list of expert analysis confirming this thesis is abundant. To pick just one example, University of Colorado economist Barry Paulson ran a regression analysis of state economic performance and concluded that “the analysis underscores the negative impact of income taxes on economic growth in the states” and that states relying on income taxes for revenue experienced slower economic growth than states relying on other taxes for revenue.
In a 2001 paper, Ohio University economist Richard Vedder compared the economic performance of states between 1957 and 1997 and found a “strong negative relationship between income taxes and economic growth,” and “sales taxes are clearly less harmful than income taxes.”
Read the whole article here.