In the “conservatism is based on stupidity and lies” category: ITEP shows that low taxes are bad for growth
Posted by Charles II on June 25, 2012
One of the most frequently repeated talking points used by lawmakers seeking to reduce or eliminate income and estate taxes is that doing so will usher in an economic boom. Recently a number of observers, led by supply-side economist Arthur Laffer, have sought to bolster this argument by claiming that states lacking an income tax or estate taxes have economies that far outperform those in the states with the highest top tax rates.
Three new reports from Institute on Taxation and Economic Policy show that the truth is exactly the opposite.
residents of “high rate” income tax states are actually experiencing economic conditions at least as good, if not better, than those living in states lacking a personal income tax. As Figure 1 shows, the nine “high rate” states identified by Laffer have actually seen more economic growth per capita over the last decade than the nine states that fail to levy a broad-based personal income tax. Moreover, while the median family’s income, adjusted for inflation, has declined in most states over the last decade, those declines have been considerably smaller in “high rate” states than in those states lacking an income tax entirely. Finally, the average unemployment rate between 2001 and
2010 has been essentially identical across both types of states.
How did an economist come to exactly the wrong conclusion? By combining–in a study of state tax rates– federal and state taxes to muddy the waters. Also, by choosing as the time frame for his study the period when growth was picking up due to the real estate boom (which, of course, was greatest in low/no tax states like Florida and Nevada). In other words, by sculpting his data and methods to fit his desired conclusion. In layman’s terms, by lying.
Laffer also claimed that Tennessee’s estate tax cost 220,000 jobs. Unfortunately for him, he produced zero credible evidence for this assertion. But he did make a testable prediction: that people are moving from Tennessee to Florida to escape the estate tax. The data do not show this.
God help us, people like Laffer are in charge. They are completely corrupt, blind, drunk on ideology.
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