Financing NC's Future

The issue of how to modernize North Carolina's tax system will take center stage this week at the Emerging Issues Forum in Raleigh, NC. Sponsored by the Institute for Emerging Issues at NC State University, the 2006 forum will explore how North Carolina can change its tax system to adequately and fairly fund public services.

Like many states, North Carolina relies upon a tax system designed for a manufacturing economy to generate the revenues needed to meet the needs of a knowledge economy. As a result, North Carolina's budget has become structurally unsound, meaning that the state fails to collect enough tax revenues to meet its spending obligations, especially in the areas of public education and health care.

Although many people believe that North Carolina's current tax system is flawed, little agreement exists over how to respond. Should government cut spending to match current revenues, lower taxes in an attempt to encourage growth, raise or restructure existing taxes, or move to a totally new revenue system like the taxation of consumption? All of these possibilities are described in a series of working papers prepared for the forum.

While tax reform may seem like a dry or technical issue, it is one that should be of vital interest to progressives. The tax system is the financial mechanism responsible for supporting a wealth of public services. Decisions about the structure of the tax system touch on fundamental issues of the role and scope of government as well as financial and social fairness. As a result, progressives across the South should pay careful attention to the discussions scheduled to take place this week in Raleigh.