LOST: Finally explained! Mysteries Solved! Secrets Revealed! Part 2

Previously on Death &Taxes, we learned that LOSTs and North Carolina’s local governments are important to each other, but dare I say it, have a complicated relationship. LOSTs are an important source of revenue and some of that revenue is earmarked, but that is not why they have been receiving so much attention.  The reason they have suddenly been a part of the tax reform discussion is the perceived inequity of the revenue raising capacity of different counties across the state. Before we get to THE question of revenue raising capacity lets back it up a bit.  First, this question is not new.  There have been concerns about this since the 1990s.  In fact, one law review article in Iowa, claimed that since LOSTs finance education that they were unconstitutional because it led to unequal education financing across the state.  This concern is also not new to North Carolina.  In fact, there are ways in which the state has (and had) structured the LOST laws in the state that address this. **Quick disclaimer: I do not know the thinking or intent behind the policy.  I can only say that it has the effect of addressing unequal revenue raising capacity issues.**