“Why ending the corporate income tax won’t create jobs”

January 30, 2013 at 10:38 am 2 comments

The Progressive Pulse posts an enlightening piece by Allan Freyer of the Budget & Tax Center on the assumption that eliminating the corporate income tax would incent corporations to reinvest savings back into the North Carolina economy and, thus, create jobs. In reality, corporations historically do not reinvest savings into the local economies, particularly multi-national companies that have operations in many other states and around the world. Much of the savings they gain by not having to pay corporate income taxes would right back go into their coffers– as stated in the post, corporations currently have $5.1 trillion in cash reserves. Or, these savings would got to shareholders.

As corporate profits have grown, even since the recession, corporations have yet to pass on the benefits of that growth to their workers, in the form of increased wages, or to their local economies. Since 2009, corporate profits have increased by 171 percent, but wages continue to stagnate. So what would make corporations act any differently than they historically  have? Given the history of how corporations operate, the outcome in North Carolina is not likely to change.

Instead, other job creation and economic development strategies could invest in our state’s resources and our future.  Workforce training, infrastructure, and education are all investments that we can make now to build up our economy on a solid foundation. Eliminating the personal and corporate income taxes would actually significantly reduce the amount of revenue we have to support these programs, and massive spending cuts would be needed in order to balance the budget. This is the opposite of what North Carolina needs to ensure a strong economy for future generations.




Entry filed under: Economic Development, Economy, Jobs & Employment. Tags: , , , .

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  • 1. Erik  |  January 30, 2013 at 11:23 am

    Very clear and concise explanation, great post!

  • […] of North Carolina for generations to come. The private sector may not be ready to invest the trillions of dollars in cash that it is currently sitting on, but the public sector certainly should step in to invest in our […]


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