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1 Scott Drenkard, Tax Reform in North Carolina: Simple, Neutral, Pro-Growth 1 (2013)

handle is hein.taxfoundation/taxfaave0001 and id is 1 raw text is: Tax Reform in North Carolina: Simple, Neutral, Pro- Growth Scott Drenkard Economist, Tax Foundation Hearing of the Finance Committee of the North Carolina Senate June 11, 2013 Chairman Rabon and Chairman Rucho, Members of the Committee: My name is Scott Drenkard, and I'm an economist at the Tax Foundation. For those unfamiliar with the Tax Foundation, we are a non-partisan, non-profit organization that has monitored fiscal policy at all levels of government since 1937. We have produced the Facts & Figures handbook since 1941, we calculate Tax Freedom Day each year, and have a wealth of data, rankings, and other information at our website, www.TaxFoundation.org. I'm pleased to have the opportunity to speak today with regard to the Senate Finance Committee Substitute to H.B. 998, a comprehensive bill to restructure North Carolina's tax code. While we take no position on the bill, I hope to give some perspective based on our research. In January of this year, my colleague Joe Henchman and I released a book titled North Carolina Tax Reform Options: A Guide to Fair, Simple, Pro-Growth Reform. In it, we detail reform recommendations in line with the principles of sound tax policy: simplicity, neutrality, transparency and stability. The focus of my testimony today is that tax structures matter just as much as tax collections. In other words, how North Carolina collects taxes can have fundamental impacts on economic growth and deadweight loss. With careful consideration, the Tar Heel state can collect the revenue it needs for necessary government services without stalling the engine of economic growth. Taxes and Economic Growth Rarely does empirical economic literature speak so strongly in unison as it does about the effect of taxes on economic growth. In 2012, my colleague Will McBride conducted a comprehensive study of peer-reviewed literature on economic growth and tax levels. He found that of the 26 studies written on the topic, 23 find that raising taxes hurts economic growth. 1