Tax Analysts Blog

A Cacophony of Opinions, Left, Right and Center

Posted on Aug 28, 2013

Kyle Wingfield, an editorial writer for The Atlanta Journal Constitution, wrote a column on August 15, 2013 calling for repeal of Georgia’s personal income tax. Based on his own research, Wingfield calculated that no income tax states had higher growth, population, and job rates than high income tax states. Add Wingfield’s analysis to the cacophony of opinions on the subject. Some liberals say high income taxes don’t matter. Other liberals say that high income taxes are actually good for the economy – which reminds me of the doctors in the 1940s who said that smoking was the key to a long life. Conservatives often act like repealing the income tax will be a game changer along the lines of the invention of the cell phone.

The Center on Budget and Policy Priorities' Michael Mazerov, one of the leading thinkers in the field, asserted in May that cutting personal income taxes will not create jobs. The folks at the Institute on Taxation and Economic Policy have been saying the same thing. Their March 5, 2012 article which appeared in State Tax Notes, “Debunking the Economic Boom Myth” is well worth reading. The Tax Foundation and a lot of other organizations have weighed in on various sides. It is hopeless to find consensus on the subject. In fact, it is so hopeless that in June of this year the CBPP’s Mazerov admitted (in response to a Tax Foundation report) that there is no consensus on the subject.

Everybody’s views on the income tax are wrapped up in their personal political opinions as to progressivity, Keynesianism, free markets, free will, fealty to public sector union bosses or fealty to Ayn Rand. Which brings me back to Wingfield. He found that the state economies with the lowest income tax burdens grew faster than the states with the higher burdens. He found that the low income tax states had higher household incomes (when adjusted for cost of living) than high income tax states. The low income tax states had higher job and population growth than the higher income tax states. I suspect that Wingfield did not use sophisticated econometric analysis. And there is no doubt people could find methodological issues with his approach. But he was looking at raw numbers of job, populations, and income growth. Since I agree with him, it all makes sense to me.

Read Comments (6)

emsig beobachterAug 27, 2013

Ach, you and Mr. Wingnut, er Wingfield, two distinguished scienticians, have
decided to add to the cacophony on this subject. It strikes me odd that Mr.
Wingnut can discern, without the use of neither sophisticated econometric
analysis nor the reading of goat entrails that the five states without personal
income taxes: TX, TN, NV, NH, and WA grew faster (over what time period?) than
the 45 states + DC that do have personal income taxes. Furthermore, the 45
states + DC that do have personal income taxes also have different rates of
growth. How does Mr. Wingnut explain those differences? Has Mr. Wingnut made
his data available so that disreputable scienticians and reputable
econometricians and statisticians can support or refute his findings? Purported
correlation does not necessarily mean causation. Unfortunately, the Atlanta
Journal Constitution has a wide readership base and many gullible readers will
take Mr. Wingnut's fevered scribblings as truth.

I hope you realize that presenting Mr. Wingnut's findings to Tax Analyst's
readers, you have set the cause of reasoned and dispassionate debate concerning
the economic impact of personal income taxation back by nearly 36 nanoseconds?

emsig beobachterAug 28, 2013

David:

My objection to Mr. Wingfield's analysis is that the roots of economic growth
and development, especially at the state level, are extremely complex. To even
suggest that the presence of a personal income tax in a state will reduce the
rate of economic growth in a state vis a vis states without a personal income
tax is absurd. For example, I'm assuming that Mr. Wingfield resides in the
State of Georgia given that he is an editor for the Atlanta
Constitution-Journal. His home state shares borders with Tennessee and Florida
-- neither of which have personal income taxes. Have these states outperformed
GA economically over a sustained period of time? Has WA outperformed Oregon?
Has SD outperformed ND? Perhaps NH has outperformed its neighbors for example.
If the answer to these questions are affirmative, then further research is
necessary.

Yes, Mr. Wingfield may be right, but I believe he is looking at the wrong tax,
or group of taxes. Perhaps he should look at whether state and local taxes
initially imposed on businesses explains variations in rates of economic growth
by state.

David BrunoriAug 28, 2013

Emsig, You may very well be right. But I am not sure why asserting
that the existence of an income tax will reduce growth is absurd. I do not think
Wingfield proved that causation. But lots of people (and not just right
wingers) have argued that more income taxes lead to less growth.

emsig beobachterAug 28, 2013

Let us agree that there is little consensus on whether income taxes reduce; or,
for that matter, increase the economic rate of growth. We should just go with
our guts on this issue and not bother to back up our prejudices with all these
confusing studies.

David BrunoriAug 29, 2013

Mr. Boebachter. I do not necessarily disagree (except for the name calling,
which is never polite). My point in posting Mr. Wingfield's article was to
illustrate that there are a lot of views on the subject -- something that both
the CBPP and the Tax Foundation acknowledge. Mr. Wingfield may very well be
speaking the truth. And he may be off base. But given the state of the
scholarly research, his guesses are as good as any. And I think the field can
stand a set back of a few nano seconds once in a while.

edmund dantesAug 29, 2013

The fact that tax rates directly affect economic growth was definitively proved
in the 1980s at the federal level.

That fact that a vastly disproportionate share of new jobs are being created in
low-tax Texas, while they are being lost in high-tax states, needs some sort of
explanation. To dismiss the role of taxation would be absurd. Jobs are not
growing in Texas because of its attractive climate.

I live in once-prosperous CT. The decline of economic growth in my state can
be tracked quite directly to the year an income tax was adopted under Lowell
Weicker. Jobs have been fleeing ever since--now we export our young people to
other states once they've been educated.

Submit comment

Tax Analysts reserves the right to approve or reject any comments received here. Only comments of a substantive nature will be posted online.

By submitting this form, you accept our privacy policy.

* REQUIRED FIELD

All views expressed on these blogs are those of their individual authors and do not necessarily represent the views of Tax Analysts. Further, Tax Analysts makes no representation concerning the views expressed and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, fact, information, data, finding, interpretation, or opinion presented. Tax Analysts particularly makes no representation concerning anything found on external links connected to this site.