Originally published on Substack. 

​This week reinforced a lesson that cuts across nearly every policy debate in America:
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People work better than government.

That may sound obvious, but it’s amazing how often policymakers forget it.

Whether the topic is poverty, jobs, housing, taxes, budgets, or inflation, the instinct in Washington and many state capitals is often the same: create another program, spend more money, or expand government authority. Yet the evidence continues to point in the opposite direction.

Take economic mobility. In my recent article for The Daily Economy⁠, later republished by RealClearMarkets⁠, I challenged the myth that America has a permanent underclass trapped in poverty.

The reality is that most people move through income brackets over their lifetimes as they gain skills, build careers, start businesses, and accumulate wealth. The goal of public policy shouldn’t be managing outcomes—it should be expanding opportunities.
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The same principle showed up in the latest U.S. jobs report.

​While headlines celebrated job growth, my analysis found much of the increase came from government and government-dependent sectors. A bigger government payroll is not the same thing as a stronger economy. Lasting prosperity comes from productive private-sector growth, entrepreneurship, investment, and innovation. That’s where rising living standards come from, not government expansion.
​
Housing affordability tells a similar story. In my recent RealClearMarkets commentary⁠, I argued that America’s affordability challenges stem largely from supply constraints.

​Too many policymakers focus on restricting growth instead of expanding supply. Whether it’s housing, energy, water, or data centers, abundance—not scarcity—is the path to lower prices and greater opportunity.
​
The question of ownership remains central as well. In my latest property tax work, including Wyoming’s path toward property tax relief⁠, I continued making the case that if government can tax your property forever, ownership is incomplete.

Families should own their homes, not rent them from government through perpetual taxation. The solution starts with spending restraint and using surpluses to reduce and ultimately eliminate property taxes.
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That same spending restraint is at the heart of the Sustainable Budget Project. Whether examining Alabama’s $18,000 spending problem⁠ or Alaska’s resource trap⁠, the lesson remains remarkably consistent: government spending that grows faster than population growth plus inflation eventually leads to higher taxes, slower growth, and fewer opportunities.

They’re largely the result of inflation, Federal Reserve policy, rising funding costs, and increased lending risks. When policymakers abandon fiscal discipline, families eventually pay the price.
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One of the highlights of the week was seeing my work published internationally through the Instituto de Liberdade Econômica⁠, where I made the case that free-market capitalism remains the greatest engine of prosperity ever discovered.

No economic system has done more to lift people out of poverty, improve living standards, and expand opportunity.
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My economic episode this week was on how government failures hurt our ability to prosper in many ways.

Across all these issues, the lesson is the same. Economic mobility requires opportunity. Housing affordability requires abundance. Ownership requires property rights. Growth requires entrepreneurship. Prosperity requires freedom.

Government has an important role, but it cannot replace families, businesses, churches, charities, and communities. Those institutions remain the real engines of human flourishing.

The more we trust people, the more they prosper. And that’s exactly what public policy should be designed to achieve.

Originally published on Substack.

Alaska is one of the most fascinating states in America.
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It has no statewide income tax, abundant natural resources, and a unique system that sends annual dividend checks to residents through the Alaska Permanent Fund.

For many, Alaska represents a model of economic freedom.

But beneath those advantages lies a challenge that should concern every policymaker.

Alaska has become increasingly dependent on government spending financed by volatile oil and gas revenues.

When resource prices rise, government spending tends to rise with them. When revenues fall, budget shortfalls emerge, reserves are drained, and lawmakers scramble for solutions.

That’s not a recipe for long-term prosperity.

It’s a recipe for fiscal instability.

As Alaska lawmakers recently debated the state’s operating budget and the size of the Permanent Fund dividend, they were really debating a deeper question:

How can Alaska build a more sustainable future that relies less on government and more on private-sector growth?

That’s why the Sustainable Budget Project from Americans for Tax Reform is so valuable.

The project evaluates state budgets using a simple benchmark: government spending should generally grow no faster than population growth plus inflation. When spending grows faster than that benchmark, government consumes a larger share of resources that could otherwise remain with families, entrepreneurs, workers, and investors.

Alaska’s experience shows why that matters.

A Tale of Two Eras

One of the most interesting findings from the Alaska Sustainable Budget Project is that Alaska’s fiscal story over the last decade is really two stories.

Chart 1: Average Annual Budget Growth

Takeaway: Alaska exercised restraint before 2020 but spending accelerated significantly afterward.

Between 2016 and 2020, state-funds spending declined by an average of 5.7 percent annually while population growth plus inflation increased by 1.2 percent.

That was genuine spending restraint.

But after 2020, the trend reversed.

From 2021 through 2025, state-funds spending grew by 5.1 percent annually while all-funds spending increased by 6.4 percent annually. During the same period, population growth plus inflation grew by 3.6 percent.

The lesson isn’t that Alaska has always overspent.

The lesson is that temporary revenue surges often encourage permanent spending commitments.

That’s when sustainable budgeting matters most.

Small Gaps Become Big Costs

Some may look at Alaska’s spending figures and conclude there isn’t much cause for concern.

After all, Alaska’s spending growth has not matched the explosive increases seen elsewhere.

But budgets should be judged over time, not by a single year.

According to the Sustainable Budget Project, Alaska’s state-funds budget would have been approximately $8.5 billion in 2025 had spending followed population growth plus inflation over the last decade. Actual spending reached roughly $8.7 billion.

The annual gap appears modest.

The cumulative gap does not.

Over the last decade, Alaska accumulated approximately $2.8 billion in state-funds spending above a Sustainable Budget path.

For a family of four, that’s more than $15,000.
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Chart 2: Alaska Budget Comparison

Takeaway: Even modest spending growth above sustainable levels compounds into billions of dollars over time.

Fiscal problems rarely emerge from one large spending increase. More often, they result from years of spending growth that gradually exceeds what taxpayers can support.

The Bigger Problem: Dependence

Alaska’s long-term challenge isn’t merely spending.

It’s dependence.

The state’s fiscal system remains heavily dependent on oil and gas activity, investment earnings, and federal dollars. Those revenue streams can be substantial, but they are also volatile.

A healthy economy cannot rely indefinitely on government redistributing resource wealth.

In fact, one of Alaska’s biggest opportunities is to rely less on redistribution and more on economic growth.

The Permanent Fund dividend is popular, but it is ultimately a mechanism for redistributing resource revenues through government. The better long-term path is expanding opportunities for people to earn more through productive private-sector activity and ending severance taxes that put the fiscal cost directly on oil and gas companies.

The private sector is far better than government at discovering what people want, when they want it, and at prices they are willing to pay.

That requires a growing economy, more investment, less dependence on government, and spending restraint that leaves more resources in productive hands.

A Better Path Forward

The good news is that a Sustainable Budget is not austerity.

It doesn’t require spending cuts or shrinking government overnight.

It simply provides a sustainable framework for growth.

Chart 3: FY2027 Sustainable Budget Limit

Takeaway: Alaska should rein in spending within a Sustainable Budget framework.

According to ATR’s calculations, Alaska’s state-funds budget could increase from approximately $8.9 billion in FY2026 to roughly $9.2 billion in FY2027 while remaining within a Sustainable Budget path.

Government would still grow. The difference is that spending would grow at a pace taxpayers can better support over time.

That approach would help Alaska improve fiscal stability, reduce future pressure for taxes, and create a stronger foundation for private-sector growth.

Three Key Takeaways for Policymakers

First, volatile revenues require spending restraint. Temporary revenue windfalls should not become permanent spending commitments.

Second, dependence is a risk. Alaska remains too dependent on oil and gas revenues and government redistribution rather than broad-based private-sector growth.

Third, sustainable spending supports prosperity. Limiting spending growth to population growth plus inflation creates more room for investment, entrepreneurship, job creation, and long-run economic opportunity.

Closing Thoughts

Alaska’s natural resources have created tremendous wealth.

The question is whether that wealth will continue fueling larger government or be used to expand economic opportunity.

The lesson from Alaska is not that government should never grow.

The lesson is that prosperity lasts when spending grows sustainably and people have greater freedom to create value in the private economy.

The Sustainable Budget Project reminds us that long-term success depends less on how much revenue government collects and more on whether spending remains aligned with what taxpayers can support.

Alabama showed how spending can gradually outpace taxpayers.

Alaska highlights a different challenge: allowing resource wealth to create dependence rather than opportunity.

If we’re serious about economic freedom, stronger growth, and greater prosperity, sustainable spending must be the foundation.

What Do You Think?

Should states limit spending growth to population growth plus inflation?

Leave a comment below and join the conversation.

If you found this analysis valuable, please share it, restack it, and subscribe for future installments in this Sustainable Budget Project series as I examine all 50 states.

And if you’d like to support my work researching, writing, speaking, podcasting, and advancing policies that let people prosper, please consider becoming a paid subscriber.
​
Your support helps expand the reach of these ideas and strengthen the case for economic freedom, fiscal responsibility, and human flourishing.

Originally published on Substack. 

Imagine you’re sitting around the kitchen table trying to balance your family’s budget.

You got a raise this year. Prices increased a bit. Your family grew, and some expenses naturally went up.

But what if your spending increased twice as fast as your income and cost of living year after year?

Eventually, something would have to give.

You’d cut back. Reprioritize. Delay purchases. Look for efficiencies. In short, you’d exercise discipline because that’s what responsible budgeting requires.

Yet government often operates differently.

Most budget debates focus on how much revenue was collected, whether spending increased from the previous year, or which programs received more funding. Far fewer policymakers ask a more important question:

How fast should government grow?

That’s the question at the heart of my Sustainable Budget Project at Americans for Tax Reform.

The project uses a simple benchmark: government spending should change by less than population growth plus inflation. When spending consistently exceeds that rate, government claims a larger share of economic resources and leaves less with families, workers, entrepreneurs, and taxpayers.

Over the coming months, I’ll use this framework to examine states across the country.

Let’s start with Alabama.

Alabama’s Growing Spending Problem

Alabama is often viewed as a fiscally conservative state. Yet the data from the Alabama Sustainable Budget Project page tells a different story.

According to the project, Alabama’s state-funds budget grew from roughly $16 billion in 2016 to nearly $27 billion in 2025. Had spending simply followed population growth plus inflation, the budget would have been closer to $21.5 billion.

That’s a difference of roughly $5.2 billion in a single year.
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Chart 1: Alabama Budget Comparison

The chart above shows what happened. For several years, spending and the Responsible Budget benchmark moved relatively close together. Then spending accelerated. By 2025, actual spending had pulled dramatically away from what population growth and inflation would have justified.

This isn’t merely a budget issue.

It’s a taxpayer issue.

The $18,000 Cost to Families

Over the last decade, Alabama accumulated nearly $24 billion in excess state-funds spending compared with a Responsible Budget.

For a family of four, that’s more than $18,000.

That’s not a line item on a spreadsheet.

That’s money that could have strengthened retirement savings, paid off debt, or helped build an emergency fund.

Of course, not every dollar above the benchmark was necessarily wasted. Alabama benefited from strong revenue collections, federal pandemic assistance, and economic growth during much of this period.

The more important question is whether temporary revenue gains justified permanently expanding government spending.
That’s where discipline matters.

How the Gap Developed

The next chart helps explain why Alabama drifted so far from a sustainable spending path.
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Chart 2: Average Annual Budget Growth

Takeaway: State-funds spending grew 5.5 percent annually while population growth plus inflation averaged only 3.0 percent.
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At first glance, a difference of 2.5 percentage points may not seem significant.

But compounding changes everything.

Just as small differences in investment returns can create large differences in wealth over time, small differences in spending growth create dramatically larger government budgets over time.

That’s exactly what happened in Alabama.

Why Budget Structure Matters

These spending trends are occurring within a budgeting system that the Alabama Policy Institute has long argued needs reform.

API notes that more than 90 percent of Alabama revenues are earmarked for specific purposes, limiting lawmakers’ flexibility and making it harder to prioritize spending effectively.

Those structural challenges make spending restraint even more important.

The solution isn’t austerity.

The solution is discipline.

A Better Path Forward

A Responsible Budget does not freeze spending or require immediate cuts.

It allows government to grow while ensuring that growth remains aligned with taxpayers’ ability to support it.

Chart 3: FY2027 Responsible Budget Limits

Even under a Responsible Budget framework, Alabama could continue increasing spending next year.

Government would still grow.

It simply would not grow faster than the people funding it.

Three Key Takeaways for Policymakers

Spending limits matter. Population growth plus inflation provides a practical benchmark for sustainable government growth.

Alabama exceeded that benchmark. The result was billions of dollars in excess spending and a growing burden on taxpayers.

Fiscal discipline creates opportunity. Spending restraint is the foundation for lasting tax relief, stronger economic growth, and greater prosperity.

Closing Thoughts

When spending consistently exceeds population growth plus inflation, government expands faster than the taxpayers funding it. Over time, that means higher tax burdens, fewer opportunities for tax relief, and less room for the private sector to create jobs and prosperity.

Alabama is the first stop in this series. Some states will provide examples of fiscal discipline. Others will reveal even larger spending problems. But each state can be evaluated using the same standard.

If we’re serious about lower taxes, greater affordability, and stronger economic growth, the conversation must start with spending restraint.

That’s exactly why the Sustainable Budget Project matters.

What Do You Think?

Should states limit spending growth to population growth plus inflation?

Leave a comment below and join the conversation.

If you found this analysis valuable, please share it, restack it, and subscribe for future installments in this 50-state series.

And if you’d like to support my work researching, writing, speaking, podcasting, and advancing policies that let people prosper, please consider becoming a paid subscriber.
​
Together, we can help build a future where government lives within its means and families keep more of theirs.

Originally published on Substack. 

Politicians love to tell taxpayers the same story after elections: government needs more money, taxes have to go up, and families just need to pay more.

But states across the country are proving that story wrong.

The latest income tax map by Americans for Tax Reform shows a major policy shift happening in real time. More states are moving away from progressive income taxes and toward flatter, lower, and eventually zero income taxes. That matters because income taxes do two harmful things: they punish work, saving, investment, entrepreneurship, and success, and they give politicians permanent access to your paycheck.

That is the wrong relationship between citizens and government.

Government should have to justify what it spends. Taxpayers should not have to justify keeping what they earn.

How to Read the Map
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The ATR map below is useful because it shows more than today’s tax rates. It shows the direction states are moving.

Green states have zero income taxes. Yellow states have flat income taxes. Gray states still have graduated income taxes, where rates rise as people earn more. Striped states have passed legislation to eliminate income taxes over time, while other markings show states that have passed legislation to move to a flat income tax or where state leaders have endorsed income tax phaseouts.
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That distinction matters.

A state’s current tax rate tells you where it is today. But triggers, phaseouts, and flat-tax reforms tell you where the state is trying to go. And increasingly, the reform direction is clear: lower, flatter, simpler, and eventually zero!

The ATR map notes that states including South Carolina, North Carolina, Mississippi, Oklahoma, Indiana, Kentucky, West Virginia, Georgia, Ohio, Kansas, Idaho, Utah, and Montana have recently cut rates, moved toward flatter structures, or adopted triggers that keep pressure on future tax relief. And state leaders in multiple states have endorsed income tax elimination, showing that this is no longer a fringe idea. It is becoming a serious governing strategy.

Income Taxes Punish Prosperity

Income taxes are among the most destructive taxes because they fall directly on people’s productive activity.

Work more, and government takes more.

Earn more, and government takes more.

Save more, invest more, build more, and take more risks, and government takes more.

That is bad economics and bad moral reasoning.

A state should want more work, more entrepreneurship, more investment, and more upward mobility. Yet income taxes penalize all of those things. They tell families, workers, and employers that success is a revenue source for politicians.

That is why the long-run goal should be clear: no income tax!

Flat taxes are better than progressive taxes because they are simpler and less punitive at the margin. Lower rates are better than higher rates because they reduce the penalty on work and investment. But the North Star should be zero.

The Momentum Is Real

The momentum is not happening in just one state.

Mississippi passed legislation to reduce its individual income tax to 3 percent by 2030 and then continue toward zero if fiscal conditions are met. Oklahoma reduced its rate and created a path toward further reductions. Indiana cut its flat tax and created future trigger-based reductions. Kentucky has been moving down through a flat-tax trigger model. Georgia has been reducing its flat rate. Ohio moved toward a flatter, lower structure. South Carolina moved toward a lower-rate system with potential future reductions.

This is the tax competition model working.

States are watching each other. Lawmakers are learning from each other. Taxpayers are asking why their own states cannot do the same.

And they should.

But Tax Cuts Alone Are Not Enough

Here is the part too many tax-cut conversations miss: most states are still spending too much.

That is where the ATR Sustainable Budget Project is essential. ATR updated its data through FY 2025 and compares state spending to a simple benchmark: population growth plus inflation. That benchmark reflects the average taxpayer’s ability to pay for government. If spending grows faster than population growth plus inflation, government is growing faster than taxpayers can reasonably afford.

And the results are sobering.

From 2016 to 2025, aggregate state spending, excluding federal transfers, rose 65.8 percent, while population growth plus inflation rose only 32.4 percent.

That is the bigger issue.

The problem is not that taxpayers are undertaxed. The problem is that government overspends.

Only a Few States Show Real Restraint

ATR’s Sustainable Budget Project found that only eight states kept their budgets below population growth plus inflation in at least one key category. Just Colorado, North Dakota, and Texas kept both state funds and all funds spending growth below the benchmark over the decade. Five more states, Iowa, Louisiana, Mississippi, Ohio, and Oklahoma, kept state funds growth below the benchmark but not all funds.

That means the vast majority of states, including many states moving in the right direction on tax reform, still have a spending problem.

This is why income tax elimination must be paired with spending restraint.

Otherwise, lawmakers will simply cut one tax, keep spending too much, and later raise another tax. That is not tax reform. That is tax shifting.

Economic Freedom Wins

The income tax movement also connects to a bigger story: economic freedom.
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The Fraser Institute’s Economic Freedom of North America 2025 report measures the degree to which governments allow people to make their own economic choices.

It finds that from 2014 to 2023, population in the freest U.S. states grew nearly 18 times faster and statewide personal income grew nine times faster than in the least-free states.
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That is not random.

People chase opportunity. Workers chase better job markets. Families chase affordability. Entrepreneurs chase places where success is rewarded instead of punished.

States with lower taxes, restrained spending, and lighter regulatory burdens tend to create better environments for people to prosper.

The Opposition Knows This

The political class understands what is at stake.

Government unions, left-wing activists, and defenders of big government know that if more states eliminate income taxes successfully, taxpayers everywhere will ask the obvious question:

Why are we paying so much?

That is why these reforms face so much resistance.

The fight is not really about one rate or one bracket. It is about who controls the future: taxpayers or government.

The political class prefers permanent revenue. Taxpayers deserve permanent relief.

The North Star

The best path is straightforward.

First, cap spending growth to less than population growth plus inflation. Second, use excess revenue (surpluses) to buy down income tax rates. Third, broaden the tax base by eliminating carveouts instead of raising rates. Fourth, use triggers that continue reducing income taxes until they are gone. Fifth, protect taxpayers from backdoor tax hikes through property taxes, fees, and hidden regulatory costs.

That is how states can move from progressive taxes to flat taxes, from flat taxes to lower rates, and from lower rates to zero.
Income tax elimination is not reckless when spending is restrained. It is reckless to keep spending too much and demand that taxpayers pay more forever.

Three Takeaways for Policymakers

1. Income taxes punish prosperity.

They penalize work, saving, investment, entrepreneurship, and success. States that want more opportunity should move toward flatter, lower, and ultimately zero income taxes.

2. Spending restraint must come first.

The ATR Sustainable Budget Project shows most states are spending faster than population growth plus inflation. Tax cuts will last only if lawmakers control spending.

3. Economic freedom is the competitive advantage.

The Fraser Institute shows freer states grow faster. Lower taxes, restrained spending, and lighter regulatory burdens attract people, income, jobs, and investment.

The Bottom Line

The race to zero income taxes is one of the most important state policy movements in America.

It says government should not have first claim on your paycheck. It says work should be rewarded, not punished. It says states should compete to attract families, entrepreneurs, and investment. And it says taxpayers are tired of being told government must always grow while their own budgets get tighter.

But tax reform without spending restraint is a mirage.

The states that win will be the ones that cut taxes, restrain spending, and expand economic freedom together.

That is how states let people prosper.

Thank you for reading and for sharing my work. If this added value to your week, please pass it along to a policymaker, staffer, journalist, or friend who should read it. Through Ginn Economic Consulting, I am glad to help policymakers, organizations, and leaders think through tax reform, spending restraint, competitiveness, and broader pro-growth policy that lets people prosper.

Originally published at the Pelican Institute.

Louisiana is moving in the right direction. Under Governor Jeff Landry, the state is beginning to deal with years of bad policies that weakened competitiveness, slowed job growth, and made too many families look elsewhere for opportunity. 

That kind of turnaround does not happen overnight. Markets respond to incentives, but they also need time to adjust after years of government growing too much, taxing too much, and crowding out too much private activity.

That is why House Bill 824 by state Representative Beau Beaullieu, which establishes a Government Growth Limit, is an important next step. 

The bill rightly focuses on the real issue: Louisiana cannot tax-cut its way to prosperity unless it also controls spending.  

Louisiana has already made progress. The move to a flatter, lower income tax rate was a major improvement because it reduced penalties on work, investment, and entrepreneurship. Some recent budget restraint has also helped. But these reforms are only the start. More must be done to reduce the size and scope of government so the private sector can lead.

That is where the Government Growth Limit fits.

UnderHB 824, the Revenue Estimating Conference would establish a Government Growth Limit each year. The formula uses Louisiana population growth plus an inflation measure based on the chained CPI and medical care inflation, averaged over five years. The bill applies this limit to recurring State General Fund spending and links excess recurring revenue to the Louisiana Income Tax Elimination Fund.  

That connection is key. Spending restraint is not just about balancing a budget. It is about creating room to reduce tax rates. When government grows slower than tax revenue, excess money should not automatically fund more programs. It should be used to lower tax rates, remove barriers to economic activity, and help families keep more of what they earn.

New data from the Americans for Tax Reform’s Sustainable Budget Project show both progress and warning signs. Louisiana’s state funds budget grew slower than population growth plus inflation over the last decade, meaning the state spent $5.4 billion less than it otherwise could have. That is encouraging. 

But all funds (state and federal funds) spending grew far faster, with the 2025 all funds budget $13.8 billion above the population-plus-inflation benchmark and cumulative excess spending of $55.8 billion from 2016 to 2025.  

That matters because government growth rarely stays contained. If spending is limited in one place but shifts elsewhere, taxpayers still pay. A strong Government Growth Limit should help create a culture of discipline across the budget, not just a temporary accounting exercise.

Louisiana needs this discipline because the economy still has too little momentum. The latestBLS labor market data show Louisiana had 2,000,900 nonfarm jobs in February 2026, down 1,600 jobs from a year earlier. Meanwhile, nearby and competing states like Texas, Arkansas, Alabama, and South Carolina added jobs over the same period.  

That is not just a data point. It means fewer opportunities for workers, fewer customers for small businesses, and more pressure on families deciding whether to stay in Louisiana or move to states with better prospects.

The answer is not another government program. The answer is better incentives.

The private sector is much better at providing what people need and want because it must respond to real demand. If people value a product or service, businesses expand. If they do not, resources move elsewhere. Government does not face that same discipline, which is why its growth should be limited, focused, and transparent.

This is not radical. States such as North Carolina, South Carolina, and Iowa are showing that spending restraint and tax reform can work together. When states control spending and reduce tax burdens, they become more attractive places to live, work, invest, and raise a family.

Louisiana should follow that path.

The question is not whether Louisiana can afford lower taxes. The question is whether Louisiana can afford to keep falling behind while other states compete more aggressively for people, jobs, and capital.
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The Government Growth Limit is not the final reform. But it is a strong step toward the right goal: control spending, reduce tax rates, and remove barriers to growth.

Originally published on Substack. 

States across the country are learning the same lesson: tax triggers can be helpful, but they are not enough.

A tax revenue trigger can lower tax rates when collections come in strong. Good. That is better than letting government pocket every extra dollar forever.

But if lawmakers do not also restrain spending, those tax cuts will always be vulnerable to the next downturn, the next budget scare, or the next politician who thinks every extra dollar flowing into the capital belongs there.
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That is why the bigger issue is not whether tax triggers are good or bad. It is whether they rest on a strong enough foundation to last.

​North Carolina Is A Good Example

North Carolina has built one of the better tax-reform records in the country, and it should not lose its nerve now.

The state’s flat individual income tax rate fell from 4.25 percent in 2025 to 3.99 percent in 2026. The latest consensus revenue forecast says revenues in both FY 2025–26 and FY 2026–27 are high enough to trigger two more cuts, taking the rate to 3.49 percent in 2027 and 2.99 percent in 2028.

The same forecast puts General Fund revenue at about $35.079 billion for FY 2025–26 and $34.720 billion for FY 2026–27. That is real, pro-growth reform, and North Carolina should stay the course.

But tax triggers need restraint if they are going to last.

The Real Problem Is Spending

North Carolina does not have a tax-cut problem. It has a spending problem.

The 2025 state funds budget is $7.0 billion higher than it would have been if spending had grown only at that benchmark over the past decade, and cumulative excess state-funds spending over the decade reached $16.9 billion.

On the all-funds side, ATR estimates the 2025 budget is $20.2 billion higher than that sustainable path, with cumulative excess all-funds spending of $72.6 billion from 2016 to 2025.

Those are not abstract numbers. They are a sign that government has been growing faster than the average taxpayer’s ability to support it.

What This Cost Families

The family cost matters because that is where budget policy becomes real life.

I calculate that in the 2025 budget alone, excessive state-funds spending above population growth plus inflation cost a family of four $626. On the all-funds side, the 2025 budget cost per family of four was $1,806.

Over the full decade from 2016 to 2025, ATR estimates the cumulative cost per family of four was $6,023 on the state-funds side and $25,934 on the all-funds side. That is not a revenue shortage. That is what happens when government grows too fast for too long.

Why This Matters For Tax Reform

This is why I have argued before that tax reform without spending restraint is a mirage. Lower tax rates are real, and they help workers, families, entrepreneurs, and investors.

But politically, they are only as durable as the budget discipline behind them. When revenues soften, and they always eventually do, critics of tax relief will say the cuts went too far. What they usually will not say is that the real problem was letting spending balloon when times were good.

That is the weakness of tax revenue triggers by themselves.

A tax revenue trigger says: cut taxes if collections hit a target. Better than nothing.

TBut if the spending side remains loose, those cuts sit on a shaky foundation. The first rough patch in the economy gives lawmakers an excuse to say the tax relief was irresponsible, when the deeper problem was a budget that never had enough restraint in the first place. That is why tax triggers need restraint.

A Better North Star

The stronger model is what I would call a surplus trigger.
​
The idea is straightforward: tie spending growth to a maximum of population growth plus inflation and treat that as a hard ceiling, not a target. Then, if revenues exceed what is needed to fund that disciplined budget, route the resulting surplus automatically into lower tax rates.

That changes the whole incentive structure. It tells lawmakers that excess revenue does not belong to government by default. It belongs back with taxpayers unless a compelling case is made otherwise. That is much more durable than relying on nominal revenue growth alone.
​
It is also consistent with my broader work on Responsible State Budgets Across the U.S. and conservative budgeting in Iowa, where the same lesson applies: spending restraint should come first, and tax relief should be the reward for discipline.

North Carolina Should Finish The Job

North Carolina has done a lot right. Its tax reforms have made the state more competitive, and it should keep the scheduled cuts. But if lawmakers want those reforms to last, they need stronger fiscal guardrails underneath them.

That means keeping the tax-cut path. It also means imposing firmer spending discipline so future tax relief rests on actual surpluses created by restraint, not just on good revenue years that can come and go. The state’s latest forecast is encouraging. The spending record is more cautionary. Both are true at the same time.

That is the real lesson here.

Tax relief built on spending restraint is durable. Tax relief built on spending growth is fragile.

Three Takeaways for Policymakers

1. Keep the tax cuts.

North Carolina’s latest forecast supports reductions to 3.49 percent in 2027 and 2.99 percent in 2028.

2. The real threat is overspending.

ATR says North Carolina overspent by $16.9 billion on the state-funds side and $72.6 billion on the all-funds side from 2016 to 2025 relative to population growth plus inflation.

3. Make surplus triggers the North Star.

Revenue triggers are a good start. But a hard spending ceiling plus automatic tax relief from real surpluses is a more durable framework for reform. That is how reform lasts. That is how taxpayers win.

The figure below shows how the growth in Texas’ biennial budget was cut by 13.3% from 12% to 10.4% after the creation of the Conservative Texas Budget in 2014, which first influenced the 2015 Legislature when crafting the 2016-17 budget, along with changes in the state’s governor (Gov. Greg Abbott), lieutenant governor (Lt. Gov. Dan Patrick), and some legislators. ​The 10.4% average growth rate of biennial appropriations since 2016 was above the 7.9% biennial average rate of population growth plus inflation, which was driven substantially higher after the latest 2024-25 budget, which was well above this key metric (previously, the biennial budget growth was 5.2% compared with 9.3% in the rate of population growth plus inflation). ​

Making matters worse, the growth of the budget has increased substantially faster than population growth plus inflation in Texas since Republicans gained their first trifecta in control of the Governor's mansion, Senate, and House in 2003. Their first budget was in 2004-05, which the work of House Appropriations Chairman Talmadge Heflin (one of my wonderful mentors) helped address by closing a budget shortfall without raising taxes through spending cuts and restraint. The figure above highlights how the budget has grown nearly 30% faster than the average taxpayer's ability to pay for it over this period. The figure above illustrates how these excesses have accumulated over time, resulting in massive spending and substantial tax burdens on Texans. There is more work to do!​

Sustainable Budget Work With Other States, ATR, and CFGF

When I returned to the Texas Public Policy Foundation in May 2020, I sought to regain a sense of freedom during the COVID-19 pandemic and be closer to family. I started an effort to work on this sound budgeting approach with other state think tanks. This led me to work with many fantastic people who are trying to restrain government spending at the state, local, and federal levels. Here are my latest data on the federal and state budgets as part of American for Tax Reform's Sustainable Budget Project and a recent publication by the Club for Growth Foundation.

​From 2016 to 2025, the following happened:

Federal spending skyrocketed 81.9% to $7.0 trillion in 2025, which is two and a half times faster than the 32.4% increase in population growth plus inflation.

• If Congress had restrained spending to this sustainable growth rate:
  • The federal government would’ve spent $1.9 trillion less in 2025.
    
  • The national debt would’ve increased by less, with a $2.7 trillion increase instead of $15.6 trillion.
    
  • Cumulative debt since 2006 would have risen by less, by $4.2 trillion rather than $23.2 trillion.
• That’s trillions of dollars that could’ve stayed in people’s pockets or been invested in future prosperity, not siphoned off to fund bloated bureaucracies and waste.

Aggregate state spending, by the 50 state governments, excluding funds received from the federal government, increased by 65.8% during that decade to $2.1 trillion. 

• Had states’ spending grown by the maximum rate of 32.4% in population growth plus inflation from 2016 to 2025, they:
  
  • Would have spent $419 billion less in 2024.
    
  • Would have had cumulative spending be $1.8 trillion less over that decade, leaving more money in people’s pockets.​

Result: When combining federal and state overspending, Americans lost over $3.1 trillion in 2025 and more than $20.8 trillion in excess taxes and debt across the decade.