North Carolina Tax Reform Options: A Guide to Fair, Simple, Pro-Growth Reform

January 23, 2013

NORTH CAROLINA’S EVOLVING ECONOMY

The following charts illustrate how North Carolina has made substantial economic progress and job gains in recent decades, but is still trending below U.S. averages and key competitor states.

 

Income

In 1940, the average personal income of a North Carolina resident was $320 per year, barely half the U.S. average of $593 per year. By 1997, North Carolina had closed much of this gap in absolute and relative terms: that year, average personal income in North Carolina stood at $23,945, compared to the U.S. average of $27,402. Since 1997, however, North Carolina has lost ground relative to the U.S. average (see Figure 4).

Figure 4: North Carolina Average Personal Income as a Percent of U.S. Average, 1929-present
(U.S. Average Personal Income = 100%)


Source: Bureau of Economic Analysis.

North Carolina’s regional neighbors have made similar advances in closing the gap with the rest of the country (see Figure 5). Virginia has soared to become an above-average state, with Florida and Texas not far behind. North Carolina’s income statistics have closely tracked those of its neighbors Georgia and Tennessee (although Tennessee moved ahead in 2010), and ahead of its neighbor South Carolina. The gap between the states generally has also shrunk: in 1930, average income in the richest state (New York) was 5.2 times the average income in the poorest state (Mississippi), but by 2010, average income in the richest state (Connecticut) was just 1.8 times average income in the poorest state (Mississippi).

 

Figure 5: Select States’ Personal Income as a Percent of U.S. Average
(U.S. Average Personal Income = 100%)

Source: Bureau of Economic Analysis.

Gross State Product

Similarly, North Carolina has a below-average Gross State Product (GSP) per capita, compared with U.S. Gross Domestic Product (GDP) per capita. The gap between them was nearly closed in 1999-2000, but the divergence has broadened (see Figure 6).

Figure 6: U.S. and North Carolina GDP per capita, 1997-2011

Source: Bureau of Economic Analysis.

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