About Growth & Justice

  • Growth & Justice is a progressive think tank committed to making Minnesota's economy simultaneously more prosperous and fair. We believe that at a time of deep partisan division, Minnesotans can unite around one goal: a strong and growing state economy that provides a decent standard of living for all.

« Governments innovate and improve all the time, and sometimes it makes the news | Main | Minnesota needs a sense of urgency on education, says Secretary Duncan »

December 29, 2010

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00e3982414c888330147e11fd761970b

Listed below are links to weblogs that reference Let's put a stake in the heart of "High taxes kill states":

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Herbert

Thanks for the fine article...I'll use it with my greedy right wing Christian associates and friends.
P.S. Not all Christians are greedy but, the ones I know sure do enjoy their inherited wealth.

Mike Sullivan

I am sure that it not being suggested that there is no relationship between taxes and economic activity. Similarly I am sure that we'd all agree that if taxes were 100%, then that would have an influence. If that is the case, then the question is of ‘to what degree’ do taxes hinder net-positive economic activity.

I do not have the answer, and am not opposed to Morris' perspective in trying to understand that. I do agree with the antecedent in the canard that "People vote with their feet." But am uncertain about the second point "...and flee to low-tax states. It’s not the climate; it’s the taxes."

That said, I would find it difficult to put a stake in the heart of "High taxes kill states" And I am reasonably certain that our new governor has not created a convincing case that he knows as well when too much taxation hinders net-positive economic growth. In the absence of that guidance, I am going to be defensive and suspicious.

Charlie Quimby

Mike,

If you want better guidance than Arthur Laffer or Dick Morris offer, we've written about the taxes/growth relationship in some depth:
http://www.growthandjustice.org/22Oct2010.html
http://www.growthandjustice.org/Media_By_fourth_tier.html

As well as in summary:

http://growthandjustice.typepad.com/my_weblog/2010/09/tax-cuts-for-business-.html

The key points:

• Political rhetoric inflates state disparities. Differences in economic activity among states that appear associated with taxes are likely to be small.

• Study findings leave room for interpretation, so take claims with a grain of salt; take big claims with a tablespoon.

• How states balance taxes and spending matters. I.e., certain kinds of spending more than offset higher taxes.

• Tax cuts are overrated.

Sully

I read the piece “Taxes count, but their effects are complicated” in the paper in October—and thought it was well written. I re-read it again on your suggestion. It comprehensively addresses some matters, but I continue to struggle with what I blogged. I do agree with many of the conclusion in your analysis: create a “tax base as broad as possible so as to keep the marginal rates as low as possible”, but the underlying concern I have is what is the rate for which we should be taxing folks. You said it better than I that there is “ambiguity around how the state might best balance its budget with the least negative impact on economic performance.” So, the question is how much? That number/rate/% isn’t posited. And as I expressed, I am concerned that the new governor doesn’t know either. I can’t blame him, but I am certainly going to continue to be suspicious and defensive about taxes in the absence that argument. States/counties/municipalities are on the verge of bankruptcy. CA? IL? I question the leadership. Has anyone been to Chicago lately? And it may be that Morris is correct in that perception=reality and that folks are voting with their feet.

So, not arguing with you on 1) the data or 2) the ambiguity. I am suggesting that no one has knocked me over the head with a convincing that they truly understand the implications of raising the income tax.

Apologize if I haven’t reviewed this forum’s complete body of literature—though I made a good-faith effort. Good stuff and thank you for letting me speak.

Mike

The comments to this entry are closed.

Blog powered by Typepad