North Carolina and the Kansas question

In 2012, Kansas Governor Sam Brownback signed sweeping income tax cuts, calling them a “real live experiment” to see whether lower taxes would stimulate the economy enough to produce more revenue. The plan erased the top income tax bracket and lowered rates across the board, and it exempted income from pass-through businesses like LLCs. Brownback argued the cuts would pay for themselves.

They didn’t.

According to the Kansas experiment entry on Wikipedia, growth generated only enough new revenue to offset 10 to 30 percent of most of the initial tax cut, which forced spending cuts to avoid deficits. Tax revenue consistently came in below expectations. The state Supreme Court ruled that lawmakers had to increase school funding, and one account says $1.9 billion was diverted from highway improvements between 2012 and 2017 to plug the hole left by falling income tax collections.

In 2017, a Republican-led legislature repealed most of the cuts with bipartisan supermajorities, overriding Brownback’s veto.

North Carolina’s approach is slower and more cautious on paper, but it points the same direction. The flat individual rate is 3.99% in 2026. On July 7, 2026, Governor Stein signed S.B. 257, which progressively lowers the personal income tax rate from 3.99% to 2.99% over seven years: 3.49% for 2027 through 2029, 3.24% for 2030 through 2032, and 2.99% for 2033 and 2034.

The law repeals the earlier revenue-trigger cuts for those years and replaces them with an automatic schedule. After the rate reaches 2.99%, it authorizes up to two additional reductions between 2035 and 2040 if revenue thresholds are met.

The corporate side has gone even further. North Carolina has a flat 2 percent corporate income tax rate, one of the lowest in the nation and scheduled to phase down further. By law, the state will phase out the corporate income tax completely by 2030.

North Carolina isn’t just competitive with its neighbors on corporate tax. It’s already well below them.

The cuts are landing in a state that already invests little in its public schools. The National Education Association ranks North Carolina 46th in the nation for average teacher pay, and it was the only state where teacher pay was projected to drop this year. The latest budget includes an average 8% raise for teachers, but starting pay remains below the national average.

The physical infrastructure tells a similar story. The American Society of Civil Engineers gave North Carolina’s infrastructure an overall C- in its January 2026 report card.

Dams

North Carolina has 7,448 dams, and the report estimates a funding gap of about $5.97 billion to maintain and repair those not rated satisfactory. Nearly half of that, $2.83 billion, is needed for high-hazard dams, the ones where a failure would threaten lives downstream. Hurricane Helene damaged more than 40 dams in the western part of the state, and many communities are still waiting for repairs or replacements.

Bridges

State bridge funding has grown from $150 million in FY2015 to $482 million in FY2025, but more than 4,800 bridges are over 50 years old, and over 6,300 are expected to be by 2035. Bridge funding needs are projected to reach $961 million by FY2027, leaving a $479 million shortfall that keeps widening.

The replacement of the Cape Fear Memorial Bridge is estimated to cost more than $1 billion. And the State is proposing tolls to pay for the lion’s share of the construction cost.

Roads

Nearly two-thirds of state roads are rated only “fair.” A report to lawmakers found that the statewide road score of 83 remains in the good range, but the most-trafficked roads are deteriorating. The same report said the maintenance budget would need to increase by more than 159% by 2030 to keep roads up. The gas tax, a primary funding source, is declining as more drivers switch to hybrid and electric vehicles.

Much of the recent progress came from Washington, not Raleigh. The federal Infrastructure Investment and Jobs Act has provided $12.3 billion to projects statewide, helping close longstanding gaps. That federal money is a one-time boost, not a permanent funding stream.

Kansas didn’t fail because of one bad tax cut. It failed because the revenue went away and the bills didn’t.