Comment of the Day: State-Level Fiscal Policy: "While I agree with what you literally say...:
...(acknowledging your careful use of words like 'wave' and 'quickly'), can we recognize that high state tax rates (especially combined with ineffective use of the money) are, indeed, impediments to state economic growth over the long run? Again, recognizing the political realities (tax cuts always oversold as leading to huge spurts in growth; tax increases, no matter how large, argued to 'make no difference'), can't we have sensible analysis of these issues and try to put some numbers around them?...
The facts are that the states that have grown the fastest in general over the last generation are the ones with lower income tax rates. They are typically in the South and West, so the technical difficulty is disentangling tax effects from air conditioning/end of Jim Crow/jet travel/convergence effects. I'm not aware that the issue is 'solved' and that we know that the second set of factors is all that counts.
But can we say that the failure of Brownback to pull anyone across State Line Road to his New Jerusalem is surprising for those of us--like me--who thought that state-level taxes did have considerable bite? That the projected cut in projected services appears to roughly offset the implemented cut in taxes? This has moved me away from my priors on this issue. Shouldn't it move you at least slightly as well?