Report Highlights Pro-Growth Tax Reform in the States
The American Legislative Exchange Council’s Center for State Fiscal Reform released a new report yesterday looking at the 18 states across the country that made significant changes to their tax code in 2013. The report confirmed facts that ATR has long found to be true; mainly that those states that work to create a simpler, flatter, and lower tax code are the same ones that achieve greater economic success than their tax-happy neighbors.
Some of the major findings of the report are as follows:
- Of the 18 states which cut taxes in the past year, 16 of them were led by a Republican governor. Just two were led by Democrats, and both of those states (Arkansas and Montana) have state legislatures under Republican control. Additionally, 15 of the 18 states were controlled by Republicans in both legislative chambers. One was controlled by Democrats (New Mexico), one was split between the two chambers (Iowa, which has a Republican House but a Democratic Senate), and Nebraska, which has a unicameral non-partisan legislature.
- Tax hikes have a depressing effect on economic growth and prosperity. For instance, ALEC highlights Oregon, which saw relatively weak job creation compared to the rest of the nation in the period following significant income tax hikes in 2008. In fact, Dr. William McBride of the Tax Foundation found that, of the 26 peer reviewed academic studies on impact of higher taxes since 1983; only 3 have failed to find a negative impact of tax increases to economic growth.
- ALEC’s report holds up and applauds the comprehensive tax reform enacted by Gov. Pat McCrory and the North Carolina General Assembly this past year, calling it: “Without question, […] the most significant tax relief any state has passed in the last decade”.
- Of the 18 states that significantly cut taxes, almost 25% made reductions in the personal income tax rate, with 12% making reductions in the corporate tax rate. 8% made changes to the capital gains and property tax. A pie chart of the changes included in the report is found below:
For a copy of the report, click here.