Tax and spend politicians cried when North Carolina enacted a series of tax cuts in 2013 claiming the rather modest reductions would leave “huge budget holes.”
Cut to 2015 and the verdict is in.
The state just issued a budget forecast showing a $400 million surplus over expected revenue.
“Growth in April payments was consistent with other states’ experiences: Based on information from other budget and revenue officers across the nation, April tax payments were up 15-20%. North Carolina had yearly [revenue] growth of that magnitude, which was well above expectation given tax law changes. It appears that the increase was driven by increases in business income, which is often paid under the Personal Income tax, and by capital gains from the sale of stocks and real estate holdings. However, detailed IRS data will not be available until this time next year.
“Refunds declined an estimated fifty-seven percent: Tax law changes allowed for more accurate withholding tables, which reduced the refunds claimed by taxpayers. The 57 percent drop this year was much larger than the anticipated 35 percent reduction and resulted in an additional $375 million in Personal Income tax collections than projected in February.
The good news is tax cuts work to encourage economic activity and growth. The bad news is the government has more money to squander than they would otherwise.
As for the leftist economists who continually predict disaster for tax cuts, one question: Don’t you ever get tired of being wrong?