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Let's take the nine states that have no income tax and compare them with the nine states with the highest income tax rates in the nation. If you look at the economic metrics over the last decade for both groups, the zero-income-tax-rate states outperform the highest-income-tax-rate states by a fairly sizable amount.

Arthur Laffer

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Arthur Laffer
Age: 84
Born: 1940
Born: August 14
Economist
Youngstown
Ohio
Arthur Betz Laffer
Laffer
Laffer Associates
Last
Taxes
Decade
States
Highest
Fairly
Look
Groups
Zero
Looks
Nation
Compare
Take
Amount
Decades
Sizable
Economic
Income
Outperform
Nations
Nine
Metrics
Lasts
Rate
Rates

More quotes by Arthur Laffer

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I mean, everyone agrees with stress tests for banks. I mean that's clear. But banks should do that on their own. And they should worry about their own capital functioning. That's what they should do. It shouldn't be a government function.
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There are lots of other things that affect state growth besides state taxes. However, the reason I look at taxes is because these are policy variables that can be changed by state governments in order to get better results than they otherwise had.
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The zero-income-tax-rate states have far faster growth in tax revenues than did the states with highest income tax rate over this period.
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We are having the single worst recovery the U.S. has had since the Great Depression. I don't care how you measure it. The East Coast knows it. The West Coast knows it. North, South, old, young, everyone knows it's the worst recovery since the Great Depression.
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The tax rate increases reduce economic growth they shrink the pie they cause more poverty, more despair, more unemployment, which are all things government is trying to alleviate with spending.
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There are several states that move from Karl Marx-like policies to Adam Smith-like policies and back again in a weekend. So for the states with huge volatility in their income tax policies over time, the differences in growth rates in those periods are really amazingly consistent with tax rates really mattering.
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It is not true that Congress spends money like a drunken sailor. Drunken sailors spend their own money. Congress spends our money.
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And you can't have a prosperous economy when the government is way overspending, raising tax rates, printing too much money, over regulating and restricting free trade. It just can't be done.
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I think the inflation prospects for the U.S. over the next five or six, seven years, are quite serious. You cannot have a bumper crop in apples without the value or the price of each apple falling. The Fed has had the largest increase in the monetary base in the history of the U.S., from colonial times to the present, times ten.
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With the shrinking of the US economy, and it's shrinking very rapidly, you not only have more money, but you also have fewer goods. That's a classic double-whammy on inflation.
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You know, without China there is no Wal-Mart and without Wal-Mart there is no middle class and lower class prosperity in the United States.
Arthur Laffer