To Be Rather than to Seem: Fiscal Responsibility and the Political Economy of North Carolina

36 Pages Posted: 7 Jun 2018  

Zachary Gochenour

James Madison University - Economics Program

Date Written: 01/19/2016

Abstract

Real state spending per capita has increased fourfold in North Carolina since 1970. Three sources of revenue allowed for this increase: (1) tax increases, (2) increased debt, and (3) increased federal transfers. The latter two revenue sources have served to mask the true cost of increased spending—that is, they have created a fiscal illusion by transferring costs to future generations of workers and by dispersing costs across all federal taxpayers and debt holders. We argue that despite recent reforms, North Carolina’s long-run spending trend is unsustainable. To return the state to long-term fiscal solvency, reforms must likewise be focused on long-term institutional incentives. To be competitive with other states, North Carolina’s taxes, regulations, and property rights protections must all be competitive.

Suggested Citation

Gochenour, Zachary, To Be Rather than to Seem: Fiscal Responsibility and the Political Economy of North Carolina (01/19/2016). MERCATUS RESEARCH. Available at SSRN: https://ssrn.com/abstract=3191412

Zachary Gochenour

James Madison University - Economics Program ( email )

United States

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