New York Times: No Income Tax? No Boost.
media mentionJune 26, 2012, 3:52 pm
By JULIET LAPIDOS
This past February, Oklahoma Governor Mary Fallin announced a plan to phase out her state’s income tax over ten years. “We’re going to have the most pro-growth tax system in the region,” she said, according to The Wall Street Journal. Lawmakers in Kansas and Missouri have also pushed to eliminate their state income taxes this year—convinced, like Ms. Fallin and like the majority of the Republican Party since the 1980s, that the best way to grow is to cut.
Too bad there’s no proof this theory is right. A new study from the Institute on Taxation and Economic Policy shows what liberals have always suspected: States that don’t impose an income tax are not more competitive. No income tax? No boost.
Drawing from the study, Bloomberg News reports that “the nine states with the highest personal income taxes on residents outperformed or kept pace on average with the nine that don’t tax their residents’ incomes.”
From 2001 to 2010, per-capita economic output increased an average 8.1 percent across all 50 states. The nine no-tax states did slightly better: 8.7 percent. But the nine high-tax states did even better than that: 10.1 percent. Moreover, median household income in the no-tax states fell an average 3.5 percent, compared with .7 percent in the high-tax states.
Supply-side economics doesn’t work, but that won’t stop the Mary Fallins of the world from foisting it upon us.