Economic policy reports, blog postings, and media stories of interest:
The N.C. Budget & Tax Center explains why a reduction in the state’s nominal corporate tax rate will do little to boost growth.
In the short term, corporate tax cuts are unlikely to provide the needed local boost to support the economic recovery and job creation. That is because, as research has found, the impact of tax cuts on corporate investment would not only be small but require years to fully take effect. Additionally, businesses are likely to distribute these additional dollars to their shareholders who are often living out of state. Evidence has generally found that a 10‐percent reduction in total state and local taxes paid by businesses is likely to boost economic output and jobs by only about 2 percent. However, again, this does not account for the negative impact of the offsetting cuts to public structures that would be required to pay for such tax cuts.
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The job creation goals of the Governor and other policymakers are important to the state’s economic recovery. But investments to achieve that goal must be cost‐effective in the immediate and long‐term.Cuts in the corporate tax rate are not targeted to business undertaking new investments, job creation or research and development. Thus, they do not generate the kind of new economic activity that is needed to create more jobs.
Via Economist’s View … another reminder, this time from the U.S. Office of Management and Budget, that Social Security spending is not a real driver of the country’s long-term budget problems.
Economic policy reports, blog postings, and media stories of interest:
For the benefit week ending on January 29th, 14,520 North Carolinians filed initial claims for state unemployment insurance benefits, and 136,523 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and fewer continuing claims. These figures come from data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 17,862 initial claims were filed over the previous four weeks, along with an average of 141,030 continuing claims. Compared to the previous four-week period, there were fewer initial and continuing claims.
One year ago, the four-week average for initial claims stood at 19,986 and the four-week average of continuing claims equaled 207,857.
While the number of claims has dropped over the past year so has covered employment. Last week, covered employment totaled 3.7 million, down from 3.9 million a year ago.
The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.
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