State tax cuts and growth: nothing to see, please move along…

Jared Bernstein Posted by Jared Bernstein.

From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team.


State tax cuts and growth: nothing to see, please move along…

Source: ITEP

My WaPo piece out this AM debunks an oft-repeated Art Laffer claim about low-tax states outperforming higher tax ones. The piece emphasizes changes in the most recent year showing no patterns at all between state taxes and growth. But, as I note, other analysts have examined these claims over longer time periods and found them equally unsupported by evidence.

The figures below, from the Institute on Taxation and Economic Policy and economist Peter Fisher, show the same story as the one-year figures in my piece. No-income-tax states do not outperform high-income-tax states, and the ALEC-Laffer rankings do not predict state economic performance.

Source: Peter Fisher

Source: Peter Fisher