Home / World News / What happened when North Carolina cut taxes like the GOP plans to for the country – The Denver Post

What happened when North Carolina cut taxes like the GOP plans to for the country – The Denver Post

By Todd C. Frankel, The Washington Post

BURLINGTON, N.C. – For a peek into a world after a massive tax cut, visit North Carolina and ride along with factory owner Eric Henry.

Conservative groups have hailed North Carolina as a model of a tax overhaul since it began slashing state corporate and individual tax rates four years ago. And one of the effort’s main architects, Thom Tillis, is now in the U.S. Senate, where early Saturday he joined 50 other Republican senators in voting for a $1.5 trillion federal tax overhaul – a plan that employs many of the same tactics already in use here.

But as Henry drove through the conservative, rural county he’s called home all his life, he had trouble seeing many benefits of the tax cut. Business was good, but it wasn’t good enough that he could give his 20 workers significant raises.

And there were growing worries that the lost tax revenue – estimated at $3.5 billion this year alone – was beginning to significantly hurt core public services such as schools.

“I don’t know the people who this benefits,” Henry said of the North Carolina tax cut.

Changing the national tax code is much different from changing a state’s code. But what’s happening today in North Carolina offers potential clues about the grand experiment with tax cuts the entire nation is close to embarking on, with Republicans appearing confident they can send final legislation to President Donald Trump by year’s end.

The tax changes in North Carolina haven’t produced the fiscal calamity that led Republican legislators in Kansas this year to reverse dramatic cuts they passed a few years earlier, but nor have they produced the kind of win-for-all economic prosperity national Republicans say their effort will spur.

Instead, North Carolina has enjoyed the same steady growth as much of the country, making it challenging to estimate the impact of the tax cut compared with the many other factors shaping the state’s economy.

“There’s nothing magical that has happened in North Carolina,” said John Quinterno, an economic analyst at the Chapel Hill-based research group South by North Strategies.

Henry, 60, runs a T-shirt manufacturer called TS Designs, which sources all its material locally. His company almost went belly up in the mid-1990s when free-trade pacts such as the North American Free Trade Agreement opened the borders to cheap foreign textiles. Henry knew he couldn’t compete on price. So he rebuilt his business around selling a higher-quality, locally made product instead.

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