Is it time to reset

Published 8:32 pm Tuesday, September 2, 2008

By Staff
our tax gauge?
Does society have a natural tax threshold? In other words do people have some common, innate sense of how much of their overall income they are contributing to pay for public services and do they want to keep that amount within a certain range? The data suggest that is the case.
Witness the latest rendition of the conservative Tax Foundation’s annual report ranking states according to their combined state and local tax levels. The report released on Aug. 8 says that in North Carolina residents contribute 9.8 percent of their total personal income to running state and local governments, slightly above the national average of 9.7 percent. According to the report, the Tarheel state ranks 20th out of 50 states (according to more reliable Census Bureau data the state ranks 27th on this measure). North Carolina typically ranks somewhere near the middle of the pack on any reasonable state and local tax comparisons.
But here is where the data get interesting. According to the report, in 1977 fully 30 years earlier, the residents of North Carolina contributed 10 percent of their total income to run state and local government, only two-tenths of a percent different than the 2008 data. It’s true that today people contribute more in dollars to support public services because incomes have grown since then (although income gains of the wealthy have far outpaced low-and middle-income families). Yet somehow without choosing 10 percent or thereabouts as an explicit target, residents have managed to keep taxes constant relative to their collective incomes. How strange. It’s almost as if residents are applying the ancient religious practice of tithing, or contributing 10 percent of one’s income to support religious life, without even realizing it.
Imagine if the residents of North Carolina increased their overall tax contribution by one percentage point. That would raise a mind-blowing $3 billion every year. Somehow resetting our collective internal tax gauge seems worth it if that means we can achieve some of our most high-minded goals, such as providing all children with a sound and basic education, ensuring that every person has access to affordable health insurance or even making sure that people suffering from alcohol and drug addiction have access to high quality treatment and rehabilitation.
That’s only one list of what we could do with $3 billion more each year to invest in achieving our common goals. Can’t we spare one percentage point to make our state a better, fairer, healthier place to live? Undoubtedly achieving such feats would grow the economy by more than the cost of the investments themselves. Seriously, think about it.