DURHAM — Gov. Pat McCrory touted what he termed as the “Great Carolina Comeback” on Monday as evidence the state’s Republican-authored economic and tax reforms are working.
McCrory was the keynote speaker at the Annual Economic Forecast Forum hosted by the North Carolina Bankers Association and North Carolina Chamber. The crowd of about 1,000 people at the luncheon were friendly to McCrory’s pro-business message, giving the governor a standing ovation as he took the stage.
“We had the highest tax rates in the Southeast,” McCrory said. “... We think this tax reform, which lowered your corporate tax rates and lowered your income tax rate, will help existing businesses grow and help in the recruitment of new businesses and we’re already seeing a very positive impact.”
North Carolina has historically had a three-tier tax system in which the highest income earners paid taxes at a higher 7.75 percent rate than the middle class and working poor. Under the state’s new system taking effect this year, all taxpayers pay the same 5.8 percent income tax rate — ensuring that those with the largest incomes will benefit the most.
McCrory made no mention of the fact many low-income residents will actually pay more under the new plan when the loss of tax credits and new sales taxes are added in.
McCrory cited the 2 percentage point drop in the state’s unemployment rate since he took office last January as evidence of the success of his administration’s agenda.
That state’s 7.4 percent unemployment rate is still higher than the national average, which has also declined in the past year. The size of the state’s total labor force has also declined as economists have said many unemployed people gave up looking for jobs, while the number of people actually employed has grown very modestly by about 6,100 workers.
McCrory expressed no regrets about his decisions last year to eliminate financial assistance to the long-term unemployed and the refusal to expand Medicaid coverage to hundreds of thousands of low-income workers under the federal Affordable Care Act. Both decisions have been criticized by economic and health policy experts, who say the loss of billions in federal spending in the state has slowed, not aided, North Carolina’s economic recovery.
“In our first several months in office we knew we had to take some urgent action to help turn around the North Carolina economy,” McCrory said. “We had to make some very, very difficult decisions, some very controversial decisions. But we knew had to move quickly if we were going to keep up not only with the rest of the nation, but our neighboring states.”