ON-Lion Letter

"Real state spending per capita has increased fourfold in North Carolina since 1970," begins a January report from the Mercatus Center at George Mason University in Arlington, Va.  "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," according to Stephen Miller and Zachary Gochenour in To Be Rather Than to Seem:  Fiscal Responsibility and the Political Economy of North Carolina.

Miller is executive director of the Manuel H. Johnson Center for Political Economy at Troy University, where he is also chair of the Department of Economics and Finance, an associate professor of economics, and the Adams-Bibby Chair of Free Enterprise.  Gochenour is a visiting assistant professor of economics at Western Carolina University.

"We argue that despite recent reforms, North Carolina's long-run spending trend is unsustainable," Miller and Gochenour write.  "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."

The Lynde and Harry Bradley Foundation in Milwaukee supports the Mercatus Center's research on state fiscal policy.

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