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The President and the Speaker Could Learn from States

The message in an op-ed in the weekend Wall Street Journal ($) is that "states that spend less, tax less -- grow more." Written by the president and a fiscal policy analyst of Kansas' free market think tank, Kansas Policy Institute, Dave Trabert and Todd Davidson, respectively, argue:

"In the midst of a dismal recovery where every job counts, one fact stands out: States that tax less achieve better economic performance. Conventional thinking (at least within government) says that low state taxes are dependent upon having access to unusual revenue sources, but that's not it. A state could be awash in oil and gas severance taxes and still have a high tax burden if the government will not exercise restraint.

"The secret to having low taxes is controlling spending, and that's exactly what low-tax-burden states do."

Trabert and Davidson go on, and write:

"States with an income tax spent 42% more per resident in 2011 than the nine states without an income tax. States in the bottom 40 of the Tax Foundation's Business Tax Climate Index (which assesses business, personal, property and other taxes) spent 40% more per resident. In the American Legislative Exchange Council's "Rich States, Poor States" Economic Outlook (based on 15 policy variables), the bottom 40 spent 35% more than the top 10 states." (emphasis added)

So, as President Barack Obama and Speaker John Boeher continue their argument over the fiscal cliff of whether to raise tax rates for "the rich" (the President's primary argument) or to cut federal spending (the Speaker of the House's primary argument), we urge them to study closely the article by Trabert and Davidson. The President and the Speaker could learn a thing or two.

On Thursday, we growled that the Fiscal Cliff tax hikes risked doing serious economic damage, and included links to obtain contact information for President Obama and Speaker Boehner. Please contact them, and tell them ACTA sent you.

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