#19 North Carolina

Read More

The overall freedom ranking is a combination of personal and economic freedoms.

From 2012

State Facts

Net Migration Rate (?) 10 % 
Personal Income Growth (?) 1.90 %
How does the freedom ranking relate to these?


North Carolina is a rapidly growing southern state with a reasonably good economic freedom profile and an even better record on personal freedom, especially when compared with its neighbors.

We show improvement on most fiscal policies in the 2010–14 period. State taxes fell from 5.8 percent of personal income to a projected 5.4 percent. Local taxes also fell between FY 2011 and FY 2012, to 3.2 percent. Subsidies increased slightly but are still below average, while debt and government employment fell. Government employment is a bit above the national average at 14.3 percent of the private workforce, possibly due to the prevalence of public hospitals.

Despite large inmigration, North Carolina has disdained controls on the housing supply. Labor law is good, with no minimum wage, a right-to-work law, and relatively relaxed workers’ compensation rules. Cable and telecommunications have been liberalized. Occupational freedom is a weak spot, especially for the health professions. A sunrise review requirement for occupational licensing proposals was scrapped in 2011–12. North Carolina is one of the worst states for insurance freedom. It has a large residual market for personal automobile insurance, prior approval for homeowner’s insurance rates, prior approval for life insurance forms, and rate classification prohibitions. It also has a price-gouging law and a minimum-markup law for gasoline. Its civil liability system is worse than average.

North Carolina has one of the best criminal justice regimes in the South. Incarceration and victimless crime arrest rates are all below average. There is no state-level civil asset forfeiture at all, but local law enforcement frequently does an end-run around the law through the Department of Justice’s equitable sharing program. In most personal freedom categories, North Carolina is actually below average, but it enjoys its high ranking in 2014 because of its criminal justice policies, having been forced to legalize same-sex marriage, and having passed a statewide voucher program in 2014. Gun rights are more restricted than in many other southern states, with carry licenses somewhat costly to obtain and hedged with limitations. Plus, buying a pistol requires a permit, there is local dealer licensing, and most Class III weapons are difficult to obtain (sound suppressors were legalized in 2013–14).

Policy Recommendations

  • Fiscal: Cut spending on hospitals, possibly through privatization, which is very high by national standards. Individual income taxes could stand to be trimmed further.
  • Regulatory: Eliminate all rate regulations on property and casualty insurance. These reforms would have raised North Carolina five places on regulatory policy.
  • Personal: Eliminate the state monopoly on distilled spirits.
  • Map button

    Pick a New State

    North Carolina Print Version