Tuesday, September 7th, 2010
Roy Cordato
Vice President for Research
The John Locke Foundation
Roy Cordato is Vice President for Research and Resident Scholar at the John Locke Foundation. He is also Visiting Faculty at the Economics Department at North Carolina State University where he is advisor to a student club and teaches "Political Economy of the Market Process," a course that he designed. From 1993-2000 he served as the Lundy Professor of Business Philosophy at Campbell University in Buies Creek, NC. From 1987-1993 he was Senior Economist at the Institute for Research on the Economics of Taxation (IRET) in Washington, DC. He has served as full time economics faculty at the University of Hartford and at Auburn University and as adjunct faculty at Johns Hopkins University. His publications include a 1992 book, Welfare Economics and Externalities in an Open Ended Universe (Kluwer Academic Publishers). His articles have appeared in a number of economics and other social science journals and law reviews in addition to The Christian Science Monitor, The Washington Times, Investor's Business Daily, The Journal of Commerce, The Congressional Record, The Orange County Register, Liberty, Human Events, and many other newspapers and magazines. In 2000 he received the Freedoms Foundation's Leavey Award in Free Enterprise Education. He is also a member of the Mont Pelerin Society and former executive board member of The Association of Private Enterprise Education. Cordato holds an M.A. in urban and regional economics from the University of Hartford and a Ph.D. in economics from George Mason University. He also holds a Bachelors of Music Education from the Hartt School of Music.
Scholarship by Roy Cordato
Tax Reform in North Carolina
North Carolina’s system of taxation aggressively interferes with individual liberty and retards economic growth. It does this by using the tax system to reward some activities and penalize others; by placing multiple layers of taxation on saving, investment, and entrepreneurship; and by promoting forms of taxation, the best example being the corporate income tax, that are completely hidden from those who pay. Because taxation inherently interferes with both personal freedom and economic decision-making, policymakers need to be vigilant about not only how much revenue is being generated but also how those revenues are collected. Some types of taxation are more damaging to freedom and prosperity than others. It is quite clear that our current system has been developed without any attention to this fact and without an understanding of how socially damaging a poorly designed tax system can be.
The cornerstones of North Carolina’s tax system are its income tax, which accounts for 54 percent of all taxes going into the state’s general fund, and the sales tax, which contributes 26 percent of the general fund revenues. The largest portion of the remaining 20 percent comes from the corporate income tax, which contributes about 7 percent of the total. Other sources of revenue include taxes on alcohol and tobacco, inheritance and gift taxes, insurance taxes, and non-tax revenues such as user fees. While all of these need overhaul and in some cases should be eliminated, the most damaging to North Carolina’s economy and to the liberty of its citizens are the personal and corporate income tax.
Policymakers should begin to change the tax system with an eye toward the following long-term goals:
• Replace the current progressive income tax with a flat rate “consumed income tax.” This would reduce the tax penalties against economic growth by making all saving and investment tax-deductible and would reduce tax discrimination by abolishing the current “progressive” rate structure.
• Abolish the corporate income tax, which is a hidden tax on workers, consumers, and shareholders.
• Eliminate all special tax breaks for new or existing businesses. The tax code should not subsidize some businesses at the expense of others.
• Eliminate differential sales tax rates and special excise taxes. The state should not be penalizing the choices of some and rewarding the choices of others. Eliminate the sales tax on business purchases.
Certificate-of Need-Laws: It's Time for Repeal
In North Carolina and 34 other states, if you are a health care entrepreneur and you want to do anything from adding a new wing or extra beds to an existing hospital, to opening an office that offers MRI or other services, you need a “Certificate of Need” from the state.
North Carolina’s Price-Control Laws: Harming Those They’re Meant to Help
The state of North Carolina levies differing forms of price regulations on a range of what would otherwise be free-market activities.