Tags: Stephen Moore | income | gap | liberal

Heritage Foundation's Moore: Blue States Have Wider Income Gaps Than Red States Do

By    |   Thursday, 05 June 2014 09:30 AM EDT

Democratic-controlled states generally emphasize tax increases on the wealthy, raising the minimum wage and enlarging government benefits to shrink income inequality.

But that doesn't work, argue Stephen Moore, chief economist of the Heritage Foundation, and Ohio University economist Richard Vedder.

"The income gap between rich and poor tends to be wider in blue states than in red states," they write in The Wall Street Journal.

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"Our state-by-state analysis finds that the more liberal states whose policies are supposed to promote fairness have a bigger gap between higher and lower incomes than do states that have more conservative, pro-growth policies."

So what's the problem with redistributionist policies?

"Liberal policy prescriptions — especially high income tax rates and the lack of a right-to-work law — make states less prosperous because they chase away workers, businesses and capital," Moore and Vedder say.

However, they stress, "Our findings do not show that state redistributionist policies cause more income inequality. But they do suggest that raising tax rates or the minimum wage fail to achieve greater equality and may make income gaps wider."

A focus on narrowing income inequality rather than creating an economic environment that produces strong growth ironically hurts middle- and lower-income Americans most, they write.

"Our view is that John F. Kennedy had it right that a rising tide lifts all boats. It would be better for low- and middle-income Americans if growth and not equality became the driving policy goal in the states and in Washington, D.C."

On the other side of the ideological fence, a new paper from the Economic Policy Institute, a liberal think tank, says the government isn't acting strongly enough in areas like raising the minimum wage.

"Key economic evidence implicates policy decisions — and particularly changes in labor market policies and business practices — as more important in explaining the slowdown in hourly wages for the vast majority than many commonly accepted explanations," the study states.

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StreetTalk
Democratic-controlled states generally emphasize tax increases on the wealthy, raising the minimum wage and enlarging government benefits to shrink income inequality.
Stephen Moore, income, gap, liberal
338
2014-30-05
Thursday, 05 June 2014 09:30 AM
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