President Obama, in keeping with his recent habit of only visiting states that are important to his electoral prospects, is back in North Carolina this week. During previous presidential visits to the Land of the Pines, Americans for Tax Reform has highlighted the damaging economic effects that Obama’s fiscal policies have had — or will have — on the Tar Heel State. During Obama’s June visit to Durham, N.C., I noted in The Daily Caller the adverse impact that the president’s FY 2012 budget proposal would have on the small businesses that drive North Carolina’s economy.
According to IRS data, of the 4.2 million individual income tax returns filed in North Carolina in 2008 (the most recent year for which data is available), over 650,000 were for small businesses. That figure only reflects sole proprietors. When the share of small businesses made up of S-Corps and partnerships is factored in, it turns out that upwards of 825,000 small businesses file under the individual income tax system in North Carolina and would see their tax burden rise under Obama’s FY 2012 budget, which raises federal income taxes by $700 billion over the next 10 years.
As bad as President Obama’s budget would be for North Carolina’s small businesses, the White House’s assault on the energy industry will have even more devastating economic consequences for the state. For starters, the president’s American Jobs Act calls for $100 billion in higher taxes on the energy industry. Fortunately, lawmakers on Capitol Hill recognized that lobbing higher taxes on oil and natural gas companies, which account for 7.5 percent of GDP and are responsible for creating over 9 million high-paying jobs, was not a recipe for economic success at a time when unemployment is hovering near double digits and some analysts are predicting a double-dip recession. Despite calls to “pass this bill now,” Obama’s job-killing “Jobs Act” failed in the Senate last week due to bipartisan opposition.
Tax increases are only part of the White House’s disastrous anti-energy agenda. Obama’s EPA has a bevy of regulations in the works that will drive up the cost of energy for North Carolina families and employers. Earlier this year, Duke Energy, which provides electricity to 1.8 million customers in the state, requested a rate increase of 17 percent for residential customers and 14 percent for businesses. Jason Walls, spokesman for Duke Energy, attributed the proposed rate increase to “increasingly strict environmental regulations,” adding that Duke Energy is simply seeking “to recover those costs from the customers.” Duke Energy also plans to request another rate increase in 2012. “The costs are going up, we’ll need another adjustment,” Walls added. Mitt Romney got a lot of flak on the campaign trail recently for saying that corporations are people, but Duke Energy’s rate hike request is proof that corporations don’t pay taxes or the cost of regulations, people do.
So great is the concern over the impact of the EPA’s regulatory assault that the North Carolina Chamber of Commerce sent White House senior adviser Valerie Jarrett a letter in August to inform her of the havoc that pending EPA regulations would wreak on the North Carolina economy.
The Utility MACT rule is one such regulation. Designed to reduce emissions from power plants, the rule would be one of the most costly environmental regulations in EPA history. North Carolina Chamber President S. Lewis Ebert warned the White House that “it is estimated that North Carolina will lose a staggering 47,000 jobs due the cost of the Utility MACT rule, coupled with the effects of another EPA regulation.” In the letter, Ebert also cites a recent report by the National Economic Research Associates, which analyzed the collective impact of the Utility MACT rule and the Cross-State Air Pollution Rule and found that they would cost the national electric sector nearly $184 billion.
The White House may think it’s good politics to demonize energy industry executives on the campaign trail, but what they fail to mention is that their laundry list of energy taxes and onerous EPA regulations would take its greatest toll on the retirement savings of ordinary Americans. That’s because fewer than 2 percent of oil and natural gas industry shares are owned by corporate management. The rest is held by tens of millions of middle-class Americans through their retirement investments in 401(k) accounts, IRAs, pensions and other vehicles. While North Carolinians had to listen to the president’s divisive and economically illiterate rhetoric this week, the good news is that in less than 13 months they will play a key role in replacing him with someone whose agenda doesn’t involve imposing higher taxes and energy costs on North Carolinians and all Americans.
While many are suffering in the Obama economy, the state that the president is campaigning in this week has been hit particularly hard by this administration’s policies. Since the president signed the 2009 “stimulus” bill into law, North Carolina has shed over 100,000 jobs, yielding a double-digit unemployment rate.
Winning the state in 2008 was a significant achievement for Obama, making him the first Democrat to carry North Carolina since Jimmy Carter. Yet nearly three years after his historic victory, a look at the impact his policies have wrought in North Carolina underscores why it looks increasingly likely that he will be a one-term president.
Patrick Gleason is Director of State Affairs for Americans for Tax Reform.