When North Carolina Republicans took power, one of the first things they did was change the tax code to benefit the wealthiest people in the state. They followed the same principles that the Reagan revolutionaries followed, shifting the tax burden from the rich to the middle class. The results of thirty-five years of supply-side economics are in and they’re great—for the wealthiest Americans.
The principles laid out under Reagan have guided our national economic policies since 1981. They’ve slashed investments in government programs designed to help people on the lower rungs of the economic ladder climb higher. They cut the top marginal income rate by more than 40%. They slashed the capital gains tax by half and they’ve applied the estate tax to only the very richest families.
As a result, the top one percent have gained a substantially larger piece of the economic pie. In 1980, the wealthiest 1% earned only 11% of the income while the bottom 50% earned 21%. Today, the 1% earn more than 20% while the bottom 50% earn only 13%. In other words, we’re shifting income from the poorest to the richest thanks to Republican economic policies.
The 2018 World Inequality Report concludes that the shift is the result of “massive educational inequalities” and the tax structure that rigs the system for the rich. In North Carolina, Republicans are doubling down on the formula. They’re cutting taxes for the wealthy and large corporations while reducing the amount of money that goes to public schools, universities and community colleges.
From 1933, when Franklin Roosevelt introduced the New Deal, until the Reagan Revolution, the country had an economic system that focused on the middle class and providing tools to help poor people improve their economic conditions. The Democrats who ran North Carolina supported that vision. They built a world class university system that focused on providing educational and economic opportunity to North Carolinians. We built one of the best community college systems in the country to provide a well-trained workforce and attract the industry that needed it. The tax system they devised was moderately progressive, taxing the income of the wealthiest citizens at a higher rate than the poorest and taxing corporate income.
Today, any effort to mitigate the negative impact of supply-side economics and the accompanying decline in investment in educational opportunities is gone. Republicans in North Carolina are turning on the gas in transferring both income and opportunity to the people who already have both. They’ve shifted the tax burden from the wealthy to the middle-class and are working on eliminating the corporate income tax altogether. We’re 39thin per pupil spending and our investment in our universities and community colleges is declining. Our schools are re-segregating, ensuring that the population the was systematically denied access to capital for the first two hundred years of our country will continue to be marginalized.
The free-marketeers would call this shift in prosperity freedom. I call it plundering. The well-to-do have created a narrative about how they worked hard to get what they’ve got when in reality they were usually born into it. Social mobility in the state is decreasing, not increasing. Today, Charlotte has the lowest social mobility of the fifty largest cities in the country. The so-called tax reforms that Republicans instituted will make it worse, not better.