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December 29, 2010


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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


If you want better guidance than Arthur Laffer or Dick Morris offer, we've written about the taxes/growth relationship in some depth:

As well as in summary:


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.


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.


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