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Carolina Journal Radio No. 819: The case for capping N.C. capital gains tax

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
January 28, 2019 12:00 am

Carolina Journal Radio No. 819: The case for capping N.C. capital gains tax

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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January 28, 2019 12:00 am

North Carolina could make a major improvement to its tax system by ending taxation of capital gains. But the state doesn’t have to scrap its capital gains tax completely to move in the right direction. Roy Cordato, John Locke Foundation senior economist, recommends capping the capital gains tax at its current rate. With that step, the rate would never climb again, even if future legislatures decide to raise taxes in other types of income. The University of North Carolina System could do a better job recruiting military veterans as students. The system’s Board of Governors heard that message recently from Jared Lyon, president and CEO of the group Student Veterans of America. You’ll hear highlights from his remarks. Political observers are already looking ahead to the 2020 elections. John Locke Foundation Chairman John Hood warns against relying too heavily on 2018 election results when making predictions about 2020. Hood offers his own thoughts about trends and factors to keep in mind at this stage of the election cycle. State legislators recently loosened restrictions on one of North Carolina’s key targeted tax incentive programs. The decision to raise the per-job cap for the Job Development Investment Grant generated heated debate among N.C. House Republicans. North Carolina has made great strides in expanding parental school choice during the past decade. As National School Choice Week concludes, we review this state’s recent achievements with help from Terry Stoops, John Locke Foundation vice president for research and director of education studies.

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From Cherokee to current attack from the largest city to the smallest town and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most of public policy events and issues welcome to Carolina Journal radio why Michiko got during the next hour Donna Martinez that I will explore some major issues affecting our state received North Carolina could do a better job recruiting military veterans as students you would see systems board of governors recently heard that message from a military student advocate will hear highlights from his remarks. The John Locke foundation's chairman warns people not to rely too heavily on 2018 election results when they make predictions about 2020 alarm. Why state legislators recently held a heated debate over loosening restrictions on North Carolina's targeted tax incentives will hear competing arguments that will recap North Carolina's recent success with expanding families education options. Those topics are just ahead. First, Donna Martinez. George is with the Carolina Journal headline.

How would you like to pay taxes twice on the money you save well in North Carolina you do.

It's called the capital gains tax. Our next guest says that is inherently unfair and he's proposing some ways to fix it. Dr. Roy Coronado is the senior economist for the John Locke foundation. He joins us now.

Roy welcome back to the show. Glad to be back Donna so explain when we are taxed twice give us an example of how well the thing is is that the money you put into by the way we talk about capital gains, which means I buy something today I sell it tomorrow by house today. So tomorrow the difference in that price is what's called the K when you write money when I make money from buying and sigh, or could be, I build up a business. I start a business.

I build it up sell it 10 years later for certain about the difference between what I put into it and what I get out of it. At the end of the day is called capital gain wealth. Those are investments and they are made with after-tax dollars. So if I invest $100 and untaxed 10% on it. That means I only have $90 to invest. So there that that $90 now has the 10% tax has reduced not just what I'm investing.

But everything I could earn from that investment right by 10%.

So let's let's say that 10 years and now is going to earn 10% and I get $10 will now I would only get nine dollars but then the government comes in and taxes that nine dollars so it's reduced twice. I know it's all it's a little complicated. I explained my writing so hopefully people can go and look at that, but your point is that when you invest when you save money right is something we encourage people to do to penalize it and penalize you and that means encourages non-saving on investing and so on. So what does North Carolina do this in the well is such as North Carolina and the fact is that what we what we do is we tax, capital gains and other investment returns as ordinary income. Just in the same way we tax everything else, but generally people recognize this problem.

So for example at the federal level. Capital gains is treated differently.

It separated out and taxed at a much lower rate to sort of help ameliorate Emmy doesn't solve the problem but it ameliorates the problem the problem that you've already paid the taxes and the money in the first place right so contacted the second but were not could do it by as much soak in the in the federal federal tax code. I believe the tax the top rate is something like 37% but on capital gain jointly 20% so there's this capital gains differential in North Carolina.

We just it's taxed all the same. So what we do here. Well, ideally we should abolish the capital gains tax, but does not not politically, not politically palatable has been put the pop out about the federal level is not to be poopy pal palatable at the local level are at that at the state level, but we can do something to sort of move in the direction of getting the kind of differential between regular income and capital gains like they have in the federal tax code. So what I propose is very very modest is basically to All taxes on capital gains at the current flat rate of 5.25%, which is paid on everything else. That doesn't change anything in the near term.

Mike bought if I had to be that right now.

My guess is our taxes are going to go up in the future right so let's say that the top tax rate goes up to 6%, even to 7% well that capital gains rate would stay at 5.25 and it would create that differential like you have in in the federal tax code. On the other hand, if taxes go down hopefully. But again, I'm not sure I put my money on that at this point the capital gains tax would go down with it. The other thing I suggest is that we adjust the capital gains tax for inflation because some capital gains Oracle phantom K soap suds say I buy a house and it goes up by 10% in the in 10 years and over those 10 years we've had 10% inflation, the value my house is increased at all, is the same as it was, but but I would still get taxed on that perceived gain and that's why: phantom gains because is not really gain at all. Once you adjust for the cost of living in an inflation everything so what what I hear is I think going forward. We should also just plain fairness. I mean it's just not fair to tax someone on gains they don't even get right so that what we should do is adjust capital gains to for inflation where I know that you have written about this for a number of years and you think that this is really something that should be addressed by the way, you can read a Roy's work on some people however will listen to us and say, well, Dr. Coronado that that sounds really great but what you're really talking about is something just for the rich. Why should someone who is not a wealthy person care about how savings and investment is treated a number reasons. First loss not just for the rich.

For example, the lots and lots of people have 401(k)s, IRAs, right all or owner's right. I mean, these are investors. Also, small businesses, I'm one of the big ways they hope to to get to earn money from the business is some that you build it up and you sell it for more. You have a big capital gain on it. Down the road and you sell it and it your people will go.

That's gonna be my retirement savings is that business right guy who owns a pizza parlor something so it's not just for rich fat cats. Lots of people benefit from capital gains. Lots of people are in the stock market now so it's not just that but but on top of that the fact is, is that the extent of this discourages investment investment helps everybody right. We that good businesses investing to produce goods and services that that benefit society generally and to the extent it could discourage that discourages economic growth across the board. I know that you would really like the Gen. assembly to take some sort of reform action on this as you outline in your your Who knows whether they will or not. We do know that over the past half-dozen years or so that state legislators have embarked on what many people in other states. I'm looking at North Carolina say is really historic very large tax reform efforts on multiple actions that have reform the tax code. Give us a sense of your view of what's gone-great. I mean, I to me. I mean, it's bit we we create a fire flat tax. North Carolina lowered it from 7.25%, I believe, down to Knauf of of 5 1/4% flat rate. We increase the standard deduction for for people who are the lower incomes. What we have taken the corporate tax more than cut it in half and so it we've done great things in that area. This is just what it one area, one thing we haven't done is do anything about the core of the capital gains tax, which is wives and look we've done great things up on. But there's more that can be done and this is one of the things we should be looking and everything that you described. That really translates into working people, keeping more of what they are.

Absolutely that's what it's all about that's been the resultant ROI on this issue of the standard deduction at the zero tax bracket.

I give us a sense of of why you say that helps a low and moderate income people. The whole idea is your exempting of portion of your income. The first will now it's for married couples going up to $20,000 making $60,000 year or $50,000 a year. Well the first 20,000 that is going to be taxed at 00 only going to be tax for making 50 at on $30,000 at the major tax benefit right thanks much for helping us understand all this about capital gain my pleasure say when this much more Carolina journal radio to come in just a moment government plays a key role in your life affecting your paycheck the way you educate your kids the way you do business. How can you tell if government is doing a good job making the right choices.

Spending tax dollars wisely. Carolina tackles those questions every day. The John Locke foundation publishes Carolina journal in print each month and on the web each you'll find exclusive investigative reports on topics. No one else is covering what else a rundown of the best new stories, editorials and opinion columns in North Carolina.

John Hood's daily Journal news stories and important public and the voices of the newsmakers themselves at Carolina journal radio and print on the air and on the web. You can find the information you look back Carolina journal radio I Michiko guy. Should the University of North Carolina pay more attention to enrolling military veterans and students. Jared Lyon think so. Lyon is Pres. and CEO of student veterans of America. He recently addressed the UNC system's board of governors is presumed and and I almost feel terrible saying this, but I traveled 313 college and university campuses in 48 states. Over the past four years doing presentation similar to this, and there is a notion that continues to pervade and it goes something like this will G golly veterans. Thank you for your service. We appreciate that, but I must be honest that these folks are smart enough to get into college had a windup in the military.

This is actually false notion. Also, if you look at the overall aggregate data on cheers was rather interesting if we look at some colleges defined as having earned an associate's degree bachelors degree or higher.

The entire veteran population in the United States that 20+ million about 62% of us have achieved an Associates degree batches to your higher compared to society. Civil society that is higher. But if you look at the post 9/11 generation. My generation is currently in school and has recently graduated actually 76% of us have already achieved an Associates degree bachelors degree or higher. You show me a subset of the US population that has a high concentration of earned degrees at the notion that veterans don't go to college and even if they do they will succeed is is is simply false, and says current members of the military have a strong interest in education. 92% indicated that education should play a key role in their postservice transition and currently with 4.1 million post-9/11 veterans. This number is growing as servicemembers get out and let me put more specific numbers to transition each and every single year our country will produce on average 200,000 veterans, what's really interesting about this is what happens when they leave so two things are important to understand here and state in North Carolina that 80% of transitioning servicemembers when they separate from active duty to one of two things when I get out. The first is that they will either stay where their last duty station was. So if they served here North Carolina high percent chance that they'll actually stay here North Carolina. The other set is it they will go home to where they or their spouse are from originally. By going home.

I mean, returning where they're from, and North Carolina produces a whole lot of veterans see them coming and going. With regard to the states prosperity by being able to leverage this asset base population. Lyon looks more closely at the number of veterans heading to college out a 200,052% of the population will be in a college classroom within seven months of separating from active duty and a lot of people say okay what about the other 48%.

I'll remind you that it's a whole pie and stay with me on my professors prerogative here with the pie chart rates of 52% straight college 32% of the population separates from active duty already in possession of a bachelors degree or higher. That's 100% of our officer for about 14% of our enlisted force that it had to be before they enlisted or completed it while they were in using tuition assistance so we say that college is not for everybody.

It is a true statement.

We try to apply that statement to the post 9/11 era of veterans is only true for 16% of my generation, meaning that the overwhelming majority of us are either already completed our degrees for pursuing put in another way hundred and 15,000 student veterans will be coming to a college classroom. Each and every year and that is a renewable population for at least predicted the next 10 years hundred and 15,000 new students that you could be enrolling out nationwide. That's the voice of Jared Lyon, president and CEO of student veterans of America is making a case for boosting the number of military veterans at universities. This is a talent laden population and as systems are sorting to look for ways to replace lost revenue either through state funding federal funding for other student populations that we traditionally recruited into our communities from a tuition and fees perspective.

I like to make the business case for why veterans are not only outperforming their civilian counterparts with the dollars that they're bringing to postsecondary education which are federally back to the G.I. Bill are very important. This idea that veterans are not going to do well in postsecondary education. It's not a new one us. With the advent of the servicemen's readjustment act of 1944. This is how we brought a generation of World War II veterans home but there was this sort of pervasive idea among America's elite institutions of higher learning veterans were not to be college material. This is kind of not only false but it adds a little bit better to the wound. When university presidents from the University Chicago and Harvard published Bob Ed's petition Congress not to include in education provision in the act because they not only believes that the average World War II veteran, though they were grateful for their service by defeating fascism and entering the world for democracy. They just didn't believe they were to do well in college, and so they quite literally use language that said that they believe that they would create hobo towns on their college and university campuses coming only for the college money and that they would flood the campus can degrade the quality of the education but this is actually kind of funny because just three short years later those same two university presidents published retraction saying my only complaint is that my campus is crowded with too many high achieving veterans that are overwhelming the Dean's list.

We were wrong on this is the absolutely most studious population that we have in our campus, how do we get more of them will I have presented to you would see leaders what he called the business case for pursuing more military veterans and student the current generation of student veterans highly motivated to excel in college.

Top motivations for why the current generation of folks are enlisting in the military. Right now, 53% said that their primary motivation is for the education benefits 52% say desire to serve their country and 49% say that the opportunity to pursue new experiences, adventures, or travel are why they're coming in, but military influence on post-Nila postservice aspirations, 73% of current service members reported that the military service experience promoting their interest in education and 68% servicemembers surveyed said that the military actually prepare them for college.

However, many higher education today still have doubts about actively recruiting student veterans to their campus. Because of this notion that they have an assumption they won't do well wire veterans.

Such an asset on campus lances. He's search for empirical answers to that question back to my research as to why we want this population not only our classrooms but as part of our campus community and, more importantly, I think part of our alumni base our tax base is a graduate but 87% have strong work ethic and discipline than teamwork, leadership and management skills, mental toughness. This is also been described in higher education is resiliency, especially at the undergraduate level.

This is something that were struggling with in post secondary education all over the country's population is incredibly resilient either adapted to different challenges. They have a high degree of self-discipline and 78% of the population cites professionalism is the thing that they're most proud of lances, military veterans could help college campuses improve their diversity for white males. Degree attainment is higher at the Associates and graduate level but slightly below for student veterans in the four-year degree than white males that have never served, but in every other diversity and inclusion category. What these numbers represent is that veterans for white women. African-American men and women and Latino Latinos are outperforming their civilian counterparts that have never served by anywhere from 318%, which is absolutely fantastic.

North Carolina already has a significant number of student veterans actually of the sixth highest enrollment of student veterans of any state. So you're just edging out Georgia right now you have over 34,000 student veterans that are currently using G.I. Bill benefits here in the state and that totaled last year $424 million to the state to tuition fees. Just last year alone. That's Jared Lyon, Pres. and CEO of student veterans of America.

He recently offered University of North Carolina leaders. A business case for pursuing more student veterans will return with more Carolina journal radio with about if you love freedom we got great news to share with you now. You can find the latest news, views, and research from conservative groups across North Carolina all in one place North Carolina it's one stop shopping for North Carolina's freedom movement and North Carolina You'll find links to John Locke foundation blogs on the days news Carolina reporting and quick takes Carolina journal radio interviews TV interviews featuring CJ reporters and let foundation analysts, opinion pieces and reports on higher education from the James G Martin Center for academic renewal, commentary and polling data from the scimitar's Institute and news and views from the North Carolina family policy Council. That's right, all in one place North Carolina that's North Carolina spelled out North Carolina Try it today. North Carolina is changing not just day-to-day but outward to our minute to minute and 2nd to 2nd, how can you keep up with the changes, especially the ones that affect you, your family, your home, your job, make the John lot foundation and Carolina journal part of your social media diet on Facebook like the John Locke foundation like Carolina. Journal follow us on twitter at John lock in the sea and at Carolina journal news, insights and analysis you'll find nowhere else. Thanks to the experts at the John Locke foundation and thanks to the first-class investigative reporting of Carolina journal. Don't wait for the morning newspaper. Don't wait for the evening news if it's happening now it's happening here the John Locke foundation and Carolina journal. Have you covered with up to the second information like us on Facebook the John Locke foundation and Carolina journal follow us on Twitter at John Locke NC and at Carolina journal did you know you can now advance freedom and free markets just by shopping with Amazon it's true online shopping is now a great way to support the John Locke foundation just shot using the Amazon smile program and designate as the work foundation to receive a portion of your purchase amount that's right you shop and Amazon donates money to assess the John Locke foundation. So here's how it works lot onto Amazon smile. It's the same Amazon you know same products same prices. Here's what's better.

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It's that easy. So now not only will you enjoy what you buy. You'll also support freedom. Don't forget lot onto today by something nice and help defend freedom. Support the John Locke foundation will go back to Carolina journal radio I Michiko guy. Political observers are already turning their attention to 2020 elections someone to look at the recent 2018. Elections for clues about the next big races for Pres., Congress, governor and legislature. John Locke foundation chairman John Hood urges caution. This does not tell you very much about 2020 is here today. What I'm saying about that is, well, well, it lets look at the Michigan Senate race of the Michigan governors race of the Pennsylvania house races and decide which way they're going to go for trump. This is a fools errand folks is that that is the wrong way to do it. This is up for grabs. We don't who the candidates are going to be in 2016. In my opinion. Shortly after the fact was all about the particular matchup. If I think a present from been against anybody other than a Clinton might have been a lot of lost. I think that if Clinton been against you know variety of other Republicans. She would lost larger so it has to do with the matchup has to do with the specific individuals in a race and I am not assuming the truck will be the nominee. He runs will be the nominee. But I'm not quite so sure if he runs, I'm not so sure can win again might be able to pull something like the same kind of flip Pennsylvania, Michigan, Wisconsin, Ohio might still happen also proved to be kind of a flute. The couldn't I just think it's uncertain focus on North Carolina. I think that Gov. Cooper is in good shape but is not in great shape is a good shape because disapproval ratings are low. People really have a strong opinion about them, but if they have an opinion about it. It's mildly positive. Or maybe strongly positive, and that's a good sign for him. But as we have seen all races North Carolina. Our competitive he only one is led by a plurality of two principal point and if Danforth for example, or some other Republican runs. An effective campaign in the year. The dynamics of which we really don't know yet Cooper could be in trouble. The Supreme Court can't flip until 20 Took a while but the governor choices up for grabs.

And yes, the under the current maps of well actually. Current maps won't stick under the maps will be in place in 2020 Democrats to make gains in Congress or non-Republicans have a fairly good shot, taking back some seats wake in Mecklenburg. Places like that. They lost is a different electric different year, but it is also theoretically possible you'd end up after the 2020 elections with 62 or 63 Democrats in the house 26, 27 Democrats in the Senate, which again I'll return to my final make my final point. If you're comfortable with. As a Republican you want them to draw the maps, then by all means don't form the system that's John Locke foundation chairman John Hood speaking recently in Raleigh. He urges caution for those who want to apply 2018 election results to 2020 will return with more Carolina journal radio. What about where doubling down on freedom at Carolina journal radio were proud to bring you stories that impact your life and your wallet. And now get twice as much freedom when you also listen to our podcast headlock available on iTunes headlock is a little bit different.

It's a no holds barred discussion that challenges softheaded ideas from the left and the right, like Carolina journal radio headlock is smart and timely but with headlock you'll hear more about the culture wars get some more humor as well. We guarantee great information and a good time double down with S. Listen to Carolina journal radio each week and listen to headlock to remember, you can listen to or subscriber download each week iTunes Carolina journal radio and headlock just what you need to stay informed and stay entertained both brought to you in the name of freedom by the John Locke foundation. Welcome back to Carolina journal radio I Michiko guy North Carolina is expanding its targeted tax incentive program.

A recent change allows companies collecting a job development investment.

Grantor J dig to claim more money for every new job they create the state outgoing Republican representative Bill Brawley endorses the change. Currently there is a cap of $6500 per job brought to North Carolina where raising the cap to 16,000 per job now is still a percentage of the taxes paid. What this allows us to do is to compete for high wage relocations like corporate headquarters right now were not in the running. What we are changing is what is the amount per job that we can pay for a separate headquarters or a hospital facility where wages are higher than about $150,000 a year.

While I'm not in danger of being recruited for six or seven figure.job. I certainly think the state is helped by having those jobs come to North Carolina rather than Atlanta so that we can collect those taxes not another state Republican representative Scott Stone compared the incentives to decisions he makes as a business owner if I pay a signing bonus to a new employee because they can benefit our company and make us more competitive and make us better as an entire company.

Why does my other employees care and cut their salaries to give that of the person signing bonus so what differences make to the employees are being paid a fair market value in getting a fair deal already. If were recruiting somebody from the outside to come and make our company better at so I can look at this a little bit but specifically to the J dig into this specific bill. This is not a change that helps one county or one company while hurting others. This is not hurt anyone else. Republican representative Susan Martin tried to answer criticism about incentives, it's true, it's not about the incentives it's about the things that we've been doing the tax. The tax policy the business climate, a workforce that I would guess would have been the most important thing is that workforce the infrastructure. We have the really do we have broadband in the rural areas. All of these things are what makes a difference for the company in a come to North Carolina. Unfortunately the incentives are required there a piece that in the competitive environment where NN right now with the economy growing and we know it is getting on cycle sale how long is a scary mean companies are making these decisions.

Now they're restoring it putting in manufacturing there considering it because were in a good growth position as a country so this is the time that we need to be competing for these opportunities are not always available and when you look at how the companies are making a decision and a look at the spreadsheet. This is peanuts compared to the other piece is that it does matter, and we do need to compete for that house Democratic leader Darren Jackson touted the benefits of incentives helping to bring 750 jobs in a new corporate headquarters to the state, 750 families are not eaten out at restaurants in whatever area in the state. They go to.

They will be next year. They're not going necessarily to the North Carolina beaches of North Carolina mountains and visiting expanding their recreational dollars on the basketball games and football games. Instead, North Carolina right now.

Today they will our citizens will benefit from bringing this corporate headquarters and other corporate headquarters and might use this provision in the future you been listening to supporters of a recent change in North Carolina's targeted tax incentive program. Other members of the state House of Representatives remain unconvinced Republican representative Jonathan Jordan offered this assessment. One of the biggest corporate welfare in Kearny capitalism bills.

I think I've ever seen.

But you hundred and 46% increase in the bounty or price that jobs are going for now were told that the state makes money on this deal.

If that's the case why don't we put this in place for every job. Small businesses in your communities that create jobs when the local electrician hires an assistant when landscapers hire workers, restaurant, car workers, kitchen and service staff where there are $16,000 per job, they created jobs for our communities, but only the big guys get the money. Only the corporate welfare to the big corporations.

We are not in the business of investing taxpayer money into risky business schemes. We are here to provide infrastructure court system things that people can do for themselves and that would be great because he see all of our companies. All of our businesses can take advantage of new infrastructure but instead were giving a large company $16,000 per job. If you follow this issue corporate welfare, crony capitalism, you know, this is an issue that combined that you push the left and the right together. North Carolina Justice Center policy watch and the John Locke foundation left and right there.

Against this taxpayers all begins this to give away their money to corporations help dear Willie help dear we do that, you tell your local employers. Your local small business people. They cut down the street a bunch of money but for year national think so. I guess it is only produce one or two jobs at a time. Is that the difference Jordan isn't the only Republican with complaints about targeted tax incentives are presented to Larry Pittman for years I heard Republicans complain about corporate welfare and how we ought to take over state government get rid of that then we take control and it would take it over as our own and on. I never have understood that up and were willing to be part of the soul which is rated us again as the best place in the country do business and big part of this been how we reduce taxes and regulation only what we need to do the right way to handle things just keep doing that corporate income taxes for a system they make absolutely no sense because it wastes personnel time and resources of the company to keep that people that take care when Joe's paid and all that sort of thing and then they just pass call salon consumer. So what's the point of that I think will just do away with corporate income taxes right this minute we shouldn't have those might be better way to handle things. But I should stop corporate welfare and maybe you think about all the different programs we have all these millions of dollars going into his soonest purpose or stuff like that. Just think if we took that money and staying put into schools and roads and better play for Highway Patrol officer is not sourced by representative Michael speciality also registered his opposition.

The example that was given about a given bonus to an employee. That's a fine example and accepted it doesn't fit here in the recent doesn't fit here because if you're the employer that your money you spend your money and what you like, but were not spending our money or spending taxpayer money and incentives as taxpayer money, regardless of whether you're looking to physical dollars dollars were not getting that we should be getting this dollars were given away for letting them have $6500 per employee, and now were going to raise it by almost 10,000 will then that's more money were not getting for infrastructure and to pay all the bills that we have to pay in the for the state so it does affect everybody.

It is coming from somewhere else.

Incentives are not what draws people here and we keep shooting ourselves in the foot because we started off with some great ideas and some great programs. Let's cut corporate taxes and we have and that's why there are businesses looking at North Carolina because we've cut corporate taxes. We need to just continue on the plan that were on, let's cut it until it's at zero. This is what's going to bring business here regardless of opposition. The incentive measure moved forward overture with North Carolina journal radio with about a commitment to truth and transparency in government. That is the mission of Carolina journal and we are proud to deliver and now proud to tell you the North Carolina press Association has honored to members of our team with awards reporting and writing, that's right, we really do deliver award-winning journalism we shine the light on government spending, reveal the truth about boondoggles and dig deep into programs paid for with your tax money. We keep you in the know in a way other media outlets don't in our reach and influence are growing all of our outlets. We reach more than 1 million N. Carolinians each month so make sure you're one of them. Our monthly print edition arrives in your mailbox every month. Our online daily news site Carolina has fresh stories, opinion pieces, and more. The award-winning Carolina journal team I reporters make government accountable to you. Call 1866 JL FINFO for your free subscription, welcome back to Carolina journal radio Donna Martinez roughly 8/10 North Carolina kids attends a traditional public school. That means that the remaining 20% or so of the kids in the state are actually educated in a school of choice. It may be a public charter homeschool or private school. In fact, the demand for more options is growing as North Carolina takes a leadership role in the school choice movement movement celebrated this very week across the country.

Dr. Terry stoops is the John Locke foundation's vice president for research.

Also, the director of education studies and a person. He was very well connected with the folks who organize National school choice week I Terry, by the way, is also a founder of a public charter school in North Carolina. Terry welcome back to the show.

Thank you.

Tell us a little bit about the market share, so to speak of schools of choice and roughly 20% to how we compare across the country. That's one of the higher market shares as far as school choice markets go in the nation. We have an interesting situation in North Carolina because of our massive homeschool population. That's really what makes our market share kind of distinctive compared to some of the other school choice states like Arizona, Florida and Indiana is that estimates I've seen show that North Carolina has the third largest number of homeschoolers in the nation third only to Texas and California. So with such a large homeschool population with a surging number of charter school students and with a slowly increasing number of private school students are market share compares pretty favorably to some of the states that have had school choice programs for much longer than we do we have any data or even perspective. The firm homeschool parents and homeschool kids as to why that option is so popular here what's diversified I and I think that's the key.

I was recently quoted in the news and Observer on this very subject because we are finding more and more that the parents are choosing to homeschool or not the typical evangelical parents that have homeschooled in the past.

There are parents that could concerned about the safety of their child.

Their concern about the rigor of what they find in district schools and the rigors usually one thing and so the reasons for homeschooling go way beyond sort of inculcating a religious or a moral instruction. It is gone, much broader than just the evangelical community. Those on the center. Those on the left are increasingly homeschooling at larger rates, and the percentage of parents that are saying that there homeschooling for religious reasons is on the decline in North Carolina indicating that it's become an incredibly diverse well accepted movements in North Carolina and it's happening in in other states as well. We also have demand for seats in public charter schools. In fact, I mentioned that you are founder of a new public charter school in wake County, North Carolina. What is the appeal of a charter school, will the appeal is there.

There it really depends on the parents always have to go back to that but I think when we got to the point that slots Aharon Z) ideas for why they may choose to say a nontraditional classroom. That's right, and what I have found this is the parents have three main reasons why they want to choose a charter school first it's a it's a singular entity and if you're in a district like wake County, for example, that has 160,000 kids you feel a little overwhelmed by by such a large district and so to be able to go to a school that is basically doing its own thing on its own is appealing to a lot of parents. The second thing is is that they ought usually offer very unique instructional approach they offer things that you can't find in a traditional district school different ways of approaching the curriculum different ways of approaching testing and that's really, really, really appealing to a lot of parents and then finally it's things that is different that are difficult to quantify, like proximity to one's home. The size of the school. The size of the classroom.

These kind of factors that parents sort of instinctively understand but aren't really always very vocal about wanting so those are really the three factors that we have found that the charter school that I cofounded the parents are really looking for in in charter schools and their appeal. Of course continues to increase as the charter schools become much more diverse and in their instructional approach in the students that they have in the school and and in the ability of charter schools to reach students in rural communities which I have not always been the case and that's a really important point I think about the rural areas of the state. Are we seeing public charter schools crop up in those areas where it may be a smaller population of kids absolutely am and it's been a long time coming, because when we had a cap on charter schools, and it wasn't so long ago that this the state had imposed a 100 school On charters. Fortunately for the Republican Gen. assembly. They eliminated that In 2011 but before that it was very hard to get a charter to start a school and there was such a risk was storing a charter school in a rural community that many resisted the move to do so now we don't have a cap on the number of charter schools we find a lot more willingness, especially from folks in rural communities to found charter schools that may not be the mega charter schools that enroll 1500 2000 kids but a small charter school that's enrolling three or 400 kids in a predominantly rural community at the wrap on charters. Of course, from those who oppose the idea is that, well, you are attracting a parents who are very involved in their their kids education already and essentially you're choosing the cream of the crop, so to speak, that would attend those schools and that's why they're popular and that's why in many cases they do so well is a ridiculous claim. I mean there is is no evidence of that's the case now. It is true that there are charter schools that attract very well-to-do parents but there's also charter schools that attract mostly low income, mostly minority students and were seeing more and more of those schools be created in communities of of of color and low income communities, so it there really isn't a whole much of a leg for them to stand on when they make that claim.

It's a claim that's been around for decades and unfortunately has been embedded in the media narrative for so long that people's just accepted as fact but in North Carolina it is not the fact. And in fact public charters or tuition free. That's also a myth that somehow you have to pay extra money. No, that's not true that's right and the other point is that so charter schools can't just pick students if there are more applicants than the number of seats available. They have to use a lottery can't really pick and choose when using a lottery to pick the numbers they the students that gets get seats in that school. There's also some hundred thousand net enrollment or so and that private schools in North Carolina, but it does seem based on the stats that that you been writing about that private schools seems to pretty much plateaued, yet hasn't during the great recession the population for private schools decreased for obvious reasons parents and have the kind of money to be able to pay the tuition now that we have some private school choice programs in North Carolina. We seen something of a rebounds but even those programs are growing very quickly. I don't think organist see huge increases in our private school population. It's going to stay at around the hundred thousand students. Perhaps increase by a few hundred each year but were not to see the kind of growth and in private schools. As we seen in the home schools and charter schools planning this week at Terry. You and other proponents of school choice and of course the John Locke foundation being a proponent of empowering parents with more choices.

We've all been celebrating National school choice week. Why is that an important thing to do. Coming together to celebrate the freedom of parents to be able to choose the choice of education that best meets the needs of their kids. I think is absolutely critical. Terry stoops thanks very much.

Thank you and that's all the time we have for the program this week. Thank you for listening. Hope you'll join us again next week for more Carolina journal radio Carolina journal radio is a program of the job on foundation to learn more about the John Locke foundation including donations support programs like Carolina journal radio send email to development John Locke done or call 66 GLS info 166-553-4636 Carolina journal radio is the John Locke foundation Carolinas free-market think tank and Carolina broadcasting system, Inc. all opinions expressed on this program are solely those of the participant did not merely reflect the more the station. For more information about the show or other programs and services of the John foundation.

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