Description
Book SynopsisA passionate, detailed, quantified argument for state-level tax reform
An Inquiry into the Nature and Causes of the Wealth of States explains why eliminating or lowering tax burdens at the state level leads to economic growth and wealth creation. A passionate argument for tax reform, the book shows that even states with small populations can benefit enormously with the right policies. The authors' detailed exposition evaluates the impact state and local government policies have on a state's relative performance and economic growth overall, backed up with economic data and analysis.
Facts don't lie. But they do point clearly to the failure of so-called progressive tax schemes designed more to curry favor with selected constituencies than to create an economic system that leads to individual wealth as the reward for hard work and entrepreneurial risk taking. An Inquiry into the Nature and Causes of the Wealth of States is a detailed and critical look
Table of Contents
Prologue xiii
Chapter 1 The Fall from Grace: The Story of States 11 and the Income Tax Adopted 1
The Implementation of an Income Tax—A Terrible Mistake 1
That Giant Sucking Sound Is People, Output, and Tax Revenue Fleeing Income Taxes 4
Economic Malaise 4
Misleading Measures 5
Ohio 7
The Story of New Jersey—A Colorful Example of Opportunity Wasted 10
Lower Tax Revenue 10
The Rhetoric Surrounding Tax Revenue and the Decline in Public Services 11
The Case of the Disappearing Tax Revenue 12
Connecticut 13
No Bang for the Buck—How Costly Tax Increases Fail to Result in Better Provision of Public Services 16
Chapter 2 Economic Metrics 23
Primary Economic Metrics 24
Tax Revenue Performance of All States over the Past Decade 32
The ALEC-Laffer State Rankings 37
Internal Revenue Service Tax Migration Data 39
Chapter 3 The Nine Members of the Fellowship of the Ring to Balance Out the Nine Nazgûl 53
An Analysis of the Top Personal Income Tax (PIT) Rates 56
Public Services and the Personal Income Tax 61
The Effects of Oil and Severance Taxes 63
A Longer-Term View of the Data 67
An Analysis of Corporate Income Taxes 69
An Analysis of the Overall Tax Burden 73
An Analysis of the ALEC-Laffer State Economic Competitiveness Index 76
Chapter 4 Piling On 81
An Analysis of the Property Tax Burden 82
An Analysis of the Sales Tax Burden 82
Estate and Inheritance Taxes 88
Right-to-Work Laws 90
Labor Force Unionization 93
State Minimum Wages 96
Chapter 5 Give unto Caesar 99
New Hampshire—Case in Point 104
Top Traders 121
Real-Time Mobility Index 127
Chapter 6 Why Growth Rates Differ: An Econometric Analysis of the Data 133
List of Variables 137
Gross State Product Growth: Single-Variable Analysis 141
Gross State Product Growth: Two-Variable Analysis 146
Gross State Product Growth: Three-Variable Analysis 149
Population Growth: Single-Variable Analysis 150
Population Growth: Two-Variable Analysis 153
Population Growth: Three-Variable Analysis 156
Population Growth: Four-Variable Analysis 157
Conclusions 158
Annotated Econometric Bibliography 159
Key Quotes from Econometric Bibliography 186
Chapter 7 Fiscal Parasitic Leakages: Texas versus California 193
A Tale of Two States—A 55-Point Summary 194
The November 2012 Elections in California and Texas 199
Economic Performance: California, Texas, and the United States 201
A Brief Note on Poverty Metrics 207
The Texas Oil Boom and California’s Oil Bust: A Clash of Economic Cultures 208
An Overview of Total State and Local Government Revenues—Texas and California 212
Texas, California, and the United States: A Comparison of Tax Revenue and Debt Financing 213
Policy Variables Affecting Growth 218
The Relationship among Taxation, Spending, and the Achievement of Policy Objectives—A Story of Parasitic Leakages 224
Intergovernmental Revenues, Federally Mandated Social Services, and State Welfare, Medicaid, and Food Stamp Programs 225
The Provision of Public Services by State and Local Governments 229
The Performance of State and Local Public Education 235
Highways: California versus Texas 239
Prisons: California and Texas 241
Conclusion 242
Chapter 8 Au Contraire, Mon Frère: Criticisms of Our Work— Our Responses 245
Conflicts of Interest and Policies 245
Taxes and Other Supply-Side Policy Variables Don’t Affect Population and Gross State Product Growth 247
Growth Is a Move from North to South, from Clouds to Sunshine, from Cold to Warm 251
Growth Is Predominantly a Matter of Education and Not Taxes and Other Economic Policy Measures 252
Personal Income per Capita and Median Income Growth as Measures of Success Show Taxes Don’t Matter 253
Tax Rate Cuts Are Public Service Cuts 257
Other Factors Affect Population Growth (Oil, Sunshine, Accessible Suburbs, Etc.), and Therefore Taxes, Right-to-Work Laws, and Other Supply-Side Variables Don’t 259
Correlations between Tax Rates and Growth Reflect a Simultaneous Equation Bias (Reverse Causation); That Is, Growth Causes Tax Cuts, Not the Reverse 261
There Are High-Tax States That Outperform Low-Tax States; Therefore the Supply-Side Theory Is Wrong 264
The Oklahoma Argument against Tax Cuts 267
Income Distribution Becomes More Even with Progressive High-Rate Tax Codes 270
The Probity of the ALEC-Laffer Measures Is Nonexistent; Therefore Their Policy Prescriptions Are Wrong 273
Federal Tax Rates Are More Important Than State Tax Rates, and Therefore State Tax Rates Don’t Matter 275
The Wealthy Used Public Resources, and They—Not Others—Should Pay for Those Public Resources; We Need More Progressive Taxes, Not Less 276
When Is Enough Evidence Enough? If the Facts Were Reversed, We Would Concede 277
Notes 281
Bibliography 295
Acknowledgments 317
About the Authors 319
Index 321
