This video is pretty good at explaining tax competition — i.e. the idea that governments, in order to keep the geese who lay the golden eggs – must keep their taxes low enough to prevent flight. So how does this apply to North Carolina?
We charge close to the highest taxes (in both corporate and personal income) in the Southeastern U.S. So in order to attract and keep businesses, we’ve turned to economic incentives. But this can’t last forever. Indeed, state governments (and politicians) eager to shower constituents with goodies – a means of keeping power and keeping people dependent (not to mention companies flush with cash) – must keep raising taxes. Right now, N.C. is still competitive with other U.S. states who’ve gone off the deep end. But soon we’ll end up like Michigan, whose population and businesses are leaving en masse.
In order to restore the benefits of tax competition (to everyone) and remain competitive, N.C. will have to change its tax policy. While those on the far left will winge about companies paying their "fair share" (whatever that means), and good ole boys will lose some of the means by which they’re keeping power, the choice is stark: compete or die.