The Laffer Center for Supply-Side Economics at the Texas Public Policy Foundation has joined the Civitas Institute to publish a recent analysis of income taxes at the state level. The study, “Taxes Really Do Matter: Look at the States” authored by Dr. Arthur B. Laffer, a former advisor to President Ronald Reagan, and Stephen Moore, senior economics writer for the Wall Street Journal, debunks recent research by the Institute for Taxation and Economic Policy (ITEP), a group that advocates for state level income taxes.
In the report, Laffer and Moore found that in any ten-year period, the no-income tax states – Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming – consistently outperform the equivalent number of the highest income tax states – Oregon, Hawaii, New Jersey, California, New York, Vermont, Maryland, Maine and Ohio. No-income-tax states experienced a 14 percent population growth versus only 5.5 percent for the highest income tax states. Similarly, job growth in the no-income tax states was 5.5 percent while -1.6 percent in the highest tax states.
This study has major implications for North Carolina lawmakers considering tax reform in 2013. Laffer and Moore clearly demonstrate that theory and evidence both support the elimination of the state income tax to be the boldest, most pro-growth element of tax reform. Taxpayers and Legislators interested in North Carolina’s economic recovery should pay close attention to the findings of this study.