K-12 Tax & Spending Climate: States that Spend Less, Tax Less - and Grow More

Dave Trabert & Todd Davidson:

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.

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.

Posted by Jim Zellmer at December 18, 2012 1:08 AM
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