The Corner

Democratic Candidate for N.C. Governor Shares Perdue’s Foot-in-Mouth Disease

As we hit the home stretch in the North Carolina governor’s race — one of the most hotly contested gubernatorial races in the country this year — Democratic nominee Walter Dalton is going into desperation mode and getting sloppy with his remarks in the process.

Earlier this week Americans for Tax Reform noted how Dalton unintentionally complimented his opponent, former Charlotte mayor Pat McCrory, by comparing him to Wisconsin governor Scott Walker. In the same speech where Dalton made those remarks last week, the Democratic nominee also criticized Pat McCrory for saying nice things about Tennessee’s lack of an income tax. Here again, it is pretty telling that Dalton disapproves of Tennessee’s tax system. Though I’m a native North Carolinian, allow me to volunteer a defense of Tennessee’s tax code, starting with the facts.

As the chart below shows, Tennessee, thanks in large part to superior fiscal policy, has outperformed North Carolina in nearly every major metric of economic competitiveness and performance during North Carolina’s Democratic Perdue-Dalton administration:

While North Carolina has been moving in the wrong direction with job-killing tax increases under Bev Perdue and Walter Dalton, Tennessee lawmakers continue to press ahead with policies that make the state even more competitive and a more attractive place to live and do business.

#more#A law phasing out Tennessee’s death tax was passed during this year’s legislative session. In doing so, Volunteer State lawmakers helped small businesses in their state by phasing out a tax that, as the Wall Street Journal put it, “punishes a lifetime of thrift and investment solely due to the accident of death. And it does so in a way that imposes another tax on income that in most cases has already been taxed once, or sometimes twice.”

While Tennessee lawmakers were implementing pro-growth tax relief this year, critic Walter Dalton was championing a sales-tax increase on North Carolinians. Earlier this summer ATR pointed out the disproportionate impact that Dalton’s sales tax hike would have on small businesses:

A survey that was the first national measure of retailers’ sales tax compliance costs was conducted by PricewaterhouseCoopers in 2004. The report found that retailers with less than $1,000,000 in annual sales were burdened with sales tax compliance costs in excess of 13 percent of sales tax collected. Meanwhile, the big guys — retailers with income between $1,000,000 and $10,000,000 — had average compliance costs of less than six percent. The really big boys, retailers with more than $10,000,000 in sales, had compliance costs that were less than three percent on average.

And let’s not forget that Walter Dalton also supported the income-tax hike that Bev Perdue signed into law in 2009, which raised taxes on the hundreds of thousands of North Carolina small businesses that file under the personal-income-tax system.

Walter Dalton, like Bev Perdue, seems to have a penchant for insulting states that are outperforming N.C. economically. North Carolina would do well to reform its tax code using Tennessee as a model. With Pat McCrory opening up a double-digit lead in the latest Rasmussen poll, North Carolina voters appear ready to get rid of the Perdue-Dalton old guard and side with a policy agenda that will take the state in a new direction, making North Carolina more economically competitive regionally, nationally, and globally. 

— Patrick Gleason is director of state affairs at Americans for Tax Reform.

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