Tags: Laffer | Economy | Tax | Prosperity

Art Laffer: Economy Can't Be Taxed Into Prosperity

Monday, 23 April 2012 12:40 PM

Economist and former Reagan adviser Arthur Laffer and Wall Street Journal editor Stephen Moore say President Barack Obama should review what's happening in the states before continuing to try and tax the economy back into prosperity.

"Every year for the past 40, the states without income taxes had faster output growth (measured on a decadal basis) than the states with the highest income taxes," Laffer and Moore write in The Wall Street Journal. "In 1980, for example, there were 10 zero-income-tax states."

Over the decade leading up to 1980, those states grew 32.3 percentage points faster than the 10 states with the highest tax rates, they note. Job growth was also much higher in the zero-tax states.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

The states with the nine highest income tax rates had no net job growth at all, and seven of those nine managed to lose jobs.

"Over the past decade, states without an income levy have seen much higher growth than the national average," Laffer and Moore say. And those without an income tax have seen 58 percent higher population growth than the national average, and more than double the growth of states with the highest income tax rates.

Such interstate migration left Texas with four new congressional seats this year and spanked New York and Ohio with a loss of two seats each.

“The transfer of economic power and political influence from high-tax states toward low-tax, right-to-work ones is one of America's most momentous demographic changes in decades,” Laffer and Moore say. “Liberal utopias are losing the race for capital.”

“The rich, the middle-class, the ambitious and others are leaving workers' paradises such as Hartford, Buffalo and Providence for Jacksonville, San Antonio and Knoxville.”

In contrast, Illinois, Oregon and California, all state practitioners of Obamanomics, have passed soak-the-rich laws like the Buffett Rule and all face big deficits because their economies continue to sink.

Illinois has lost one resident every 10 minutes since hiking tax rates in January. California has 10.9 percent unemployment, having lost 4.8 percent of its jobs over the past decade.

The Sacramento Bee reports that unemployment in California increased to 11 percent last month, even though companies continued to pad their payrolls.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

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Monday, 23 April 2012 12:40 PM
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