State Revenue

JUST RELEASED: Tax Shift Hurts North Carolinians and Our Ability to Invest

In light of Tax Day, the Budget & Tax Center reflected on the ways in which our taxes have allowed North Carolina to support economic opportunity and contribute to thriving communities across the state. Recent choices by policymakers, however, have undermined that goal. In a new report, we highlight how a greater reliance on revenue from the sales tax and less from income taxes harms North Carolinians with the least resources and reduces revenue for public investments that position the state for broadly shared economic prosperity.

We hope that you will share the findings of this report and join us in calling for North Carolina to recognize the power of our tax dollars to build an economy that works for everyone.

IN FOCUS: Tax Cuts Won't Grow the Economy

Proponents of tax cuts continue to push a mantra of low-income taxes being a major driver of state economic growth. Research and past experience, however, has proven this approach unlikely to deliver promised economic results. Instead it can be counterproductive. Investing in K-12 education and colleges, infrastructure projects across the state, and more targeted support for main street and neighborhood revitalization initiatives presents a much better economic development strategy that helps drive the state forward. Check out more in our Policy Basic on The Reality of Tax Cuts.


North Carolina’s revenue system funds investments in the public structures—schools, courts, hospitals, colleges, universities, and infrastructure—that are critical to building and preserving a strong middle class and a 21st century economy. It is not just important that North Carolina have adequate resources to make these investments but how that revenue is raised is important too. The Budget and Tax Center produces research on state and federal tax policies with a focus on how they support economic opportunity and shared prosperity in North Carolina’s communities.

As revenue modernization once again becomes a major topic of debate in North Carolina, it is critical that proposals and ideas are measured against the following principles:

  • Equity – How much a family or business contributes in taxes should be based on its ability to pay. The wealthiest should contribute a greater share of their incomes in taxes than those who are low- or middle-income.
  • Adequacy – The revenue system should be able to keep up with the needs of the state. Population growth and changes in demographics often cause increased economic activity and greater demand for public services and better infrastructure. The revenue system should grow with the economy so state government can meet those needs.
  • Stability – The revenue system should not overreact to changes in the economy and policies, like strong Rainy Day Funds, should be in place to smooth the availability of revenue in difficult times.