Earlier in May, two starkly different fiscal news items highlighted the divergent paths taken by North Carolina and California. While North Carolina celebrated news of projected revenue surpluses in 2024 and 2025, California is grappling with a $44.9 billion budget deficit. How did these two states end up in wildly different places? The contrast is emblematic of the philosophies governing these states.
49 in the Fraser Institute's 2023 economic freedom report, which evaluates states and provinces based on variables such as government spending, taxes, labor market freedom, and more. North Carolina ranked No. 13. A significant portion of California’s tax revenue comes from capital gains taxes, making the state highly dependent on the stock market's performance.