Summary:
- Republican-led tax cuts in North Carolina are starving the state. Since 2021, aggressive tax cuts benefiting wealthy households have drained revenue, left nearly 1 in 5 state jobs unfilled, weakened public services, and contributed directly to North Carolina’s high poverty rate.
- The current budget fight is over how deep the cuts go, not whether to fix the damage.
- Kansas shows this experiment fails and the risk to NC is severe. Similar “trickle-down” tax cuts in Kansas led to job losses, revenue collapse, worse schools, and credit downgrades before being reversed.
Under the terms of a 2021 agreement, the North Carolina Legislature has embraced an aggressive regimen of tax cuts that primarily benefit wealthy households. These cuts have deprived citizens of effective and accessible public services as nearly 1 in 5 state jobs have gone unfilled due to low pay. These jobs range from nurses to youth counselors, highway patrol officers to teachers, accountants to maintenance technicians, correctional officers to DMV personnel. They are essential to a thriving economy, and the legislature’s self-imposed austerity is a top contributor to North Carolina’s high rate of poverty.
Now the legislature is locked in a stalemate over two competing versions of the budget. Both houses of the General Assembly are controlled by Republicans, so the issue isn’t partisan gridlock–it’s about internal ideological differences in just how badly they want to deprive the state of critical operational funding. is a battle over whether to keep sawing away at a bleeding wound or put down the saw. House Republicans have recognized that current policy amounts to sawing at a gaping wound and have proposed a budget that aspires to at least put down the saw, if not stem the bleeding. Senate Republicans, driven either by obstinate ideology or by subservience to Phil Berger, are instead trying to saw faster.
| Tax Year | House Personal Income Tax Plan | Senate Personal Income Tax Plan | Corporate Tax (no debate) |
| 2025 | 4.25% | 4.25% | 2.25% |
| 2026 | 3.99% | 3.99% | 2.0% |
| 2027 | 3.99%* | 3.49% (eliminates trigger) | 2.0% |
| 2028 | 3.99%* | 2.99% (eliminates trigger) | 1.0% |
| Later | 3.99%* | As low as 1.99% | 0% |
NC Republicans’ tax cut program is starving the government of resources and depriving North Carolinians of access to a basically functional government.
*Drops lower if revenue triggers are hit.
The House plan will abandon scheduled income tax reductions if state revenue fails to meet certain emergency targets. The Senate plan tosses out the existing emergency guardrails and proposes that we sail right over the edge regardless of the consequences.
Unfortunately, neither the House nor the Senate Republicans appear to have any interest in actually stitching the wound back together by enacting fair tax cuts like the Earned Income Tax Credit or the Child Income Tax Credit . Their positions might be more understandable if this were a new experiment. But it isn’t. It’s been run–and failed–before.
The Kansas Experiment
Kansas Republicans enacted an aggressive series of tax cuts in 2012 and 2013. These “supply side” tax cuts reduced taxes on the top income bracket by 30% and dropped taxes and certain business profits to 0%. The hope was that by leaving more money in the hands of wealthy residents and businesses, Kansas would benefit from more spending, more jobs, and more businesses–a classic case of trickle-down economic theory.
The problem is that none of that happened. Kansas’ private-sector job growth was less than half of the US average over the same period. Tax filers restructured their businesses to take advantage of the new exemptions. State revenues plunged. Educational outcomes tanked. The state’s bond rating suffered. The Governor recommended eliminating the Earned Income Tax Credit and raising sales taxes to try to offset the revenue gaps–both policies which demand proportionally higher contributions the less money you earn. The legislature ignored those suggestions, but, like North Carolina Republicans, they adopted a multi-year schedule to drop personal income taxes to zero if the state produced enough revenue.
By 2017, the legislature was ready to acknowledge that the program had done massive harm and completely failed. They voted to reverse the tax cuts, the Governor vetoed, and the legislature overrode his veto. The experiment had ended–with a resoundingly negative verdict.
What It Means for North Carolina
Additional tax cuts jeopardize the basic functions of the state and are part of a right-wing strategy to convince citizens that the agencies created to provide them valuable public services, to protect them from exploitation by bad actors, to enhance their quality of life, and to make basic bureaucratic necessities as painless as possible can’t succeed. It’s a smart strategy. The politicians pursuing it control the purse strings, and no agency can recruit and retain great people if it’s starved, year after year after year, for vital funding.
Kansas’ example is cause for some hope that Republicans may read the writing on the wall and choose to blink rather than crashing into it headlong. If they won’t–if they’re committed to a system of taxation where the poor pay proportionately more than the rich, and where there’s never enough money to fund the high-quality government services that every citizen deserves–then we’re in for a grim future.
