Tags: freedom | Mercatus | tax | economic

Report: Americans Are 'Voting With Their Feet'

By    |   Thursday, 30 May 2013 07:56 AM

States that have the lowest level of government financial intrusion — e.g., taxes and regulatory obstructions — also tend to have the highest economic growth rates, a new "economic freedom index" shows.

According to data of America’s 51 largest metropolitan regions from the Bureau of Labor Statistics, the top 10 areas in job growth included mostly cities in Sunbelt states, such as Houston, Dallas, Austin, Raleigh and Charlotte, while the bottom 10 featured mostly Rust Belt areas, such as St. Louis, Milwaukee and Buffalo, City Journal reported.

While employment numbers nationwide remain bleak when the underemployed or those outside the work force are factored in, some areas of America are thriving.

Editor's Note:
An $87,500 Tax Loophole Discovered by Cherry Hill Accountant

How to account for the disparity? According to City Journal, answer is contained in "Freedom in the 50 States," a new report from the George Mason University's Mercatus Center, which suggests geographic shifts in job growth are the result not only of policy, but also of "broader governing philosophies."

The Mercatus "economic freedom index" takes into account tax levels, government spending, tort laws, permits and licensing, labor rights and healthcare choices, among other factors.

"The results seem to imply that Americans value freedom and are willing to vote with their feet for it," said Jason Sorens, one of the authors of the Mercatus report.

"People definitely consider tax burden in their choice of a new home. Business regulation can dampen job opportunities, and people tend to move where the jobs are."

Sorens said taxes and regulations have made life unaffordable for some Americans, and forced them from states like California, which lost 1.5 million people last decade, to places like Texas, which gained 2 million, according to City Journal.

A separate Cato Institute study analyzing tax burdens by metro area found that the 10 lowest-taxed regions experienced three times the increase in the populations of the 10 highest-taxed metros from 1980 to 2007, City Journal reported.

Veronique de Rugy, a Mercatus researcher, testified before the Senate Budget Committee last week stating that government spending cuts can be a significant factor in economic growth.

In the United States, "public spending is about 43 percent of GDP [gross domestic product], a level common in Europe not long ago, and up from 34 percent in 2000," she explained.

A consensus among economists "seems to have emerged recently that spending-based fiscal adjustments are not only more likely to reduce the debt-to-GDP ratio than tax-based ones but also less likely to trigger a recession."

"In fact, if accompanied by the right type of policies (especially changes to public employees' pay and public pension reforms), spending-based adjustments can actually be associated with economic growth," De Rugy testified.

Editor's Note: An $87,500 Tax Loophole Discovered by Cherry Hill Accountant

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Economy
States that have the lowest level of government financial intrusion — e.g., taxes and regulatory obstructions — also tend to have the highest economic growth rates, a new "economic freedom index" shows.
freedom,Mercatus,tax,economic
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2013-56-30
Thursday, 30 May 2013 07:56 AM
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