New Wealth of States Book on Kindle

The sequel to the original groundbreaking exposé, Wealth of States, adds to the mounting pile of evidence of which policy choices lead to economic growth. Included is an even more magnified view of – not just state – but city-level taxes and their impact on prosperity. You’ll also find an analysis of how equity prices respond to state tax policies – an often overlooked yet essential tool for properly managing equity portfolios.
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Recent News

Oklahoma’s Pathway to Fiscal Prosperity

  Given Oklahoma’s proximity to Texas, one of the nine states in the United States that does not tax personal income, the state was routinely finding itself losing people and jobs to the Lone Star state. All of that started to change in 2004. That year for the first time in over 80 years, Republicans were able to take over the majority in the House of Representatives. For there, the top priority become to cut the state’s income tax rate. During that period, Rep. Kevin Calvey was the Revenue Tax Chairman – or as he likes to call it, the “Revenue Reduction and Tax Relief Chairman” – and helped with an income rate reduction, lowered over 20 percent from 2004 through 2009. Over this period of time, the top marginal rate dropped, in a series of four reductions, from 7.00 percent to 5.50 percent and Oklahoma stopped penalizing citizens and job creators for the right to earn a living. With each drop in the rate, many individuals and organizations in favor of higher government spending rallied against the income tax cuts, claiming income tax cuts would result in less revenue for state government programs. What actually transpired was that Oklahoma saw an increase, both in economic activity and tax revenues, with each of the income tax cuts implemented between 2004 and 2009. You can look at the How Money Walks IRS data to see this shift. “It’s the Grapes of Wrath in reverse – people are leaving California for Oklahoma,” Calvey said. And Oklahoma is now often used as an example for what’s right in the Heartland....

Tax Cuts Keep Florida Working

Americans are moving to the sunshine state. Rep. Mike Hill (FL) attend the 2015 American Legislative Exchange Council Conference in San Diego and talked to Travis Brown about how Florida recently surpasses New York as 3rd most populous state in the union. With 19.9 million residents, Florida ranks behind two other warm-weather states: California, population 38.8 million; and Texas, 27 million. “What it reflects is a very important milestone and shows really a long-term trend, both in Florida and in other Southern and Western states,” said Stanley Smith, a demographer with the Bureau of Economic and Business Research at the University of Florida. The Sunshine State adds on average 803 residents daily, while the state’s lack of personal income tax -and snow – appeal to retirees, young adults moving there for jobs, Smith said, lead its recent growth. Among U.S. states no place is responsible for more Floridian transplants than New York. Its upstate regions have struggled to generate job opportunities, and in turn the sunshine state has benefitted. In the book How Money Walks, Brown uses IRS data from 1992-2012 to show that Florida gained $19.73 billion in annual AGI from New Yorkers moving south. Rep. Hill knows that Florida’s tax cuts and balanced budget must be maintained to keep Florida competitive. Thanks to his work this past legislative session along side the leadership of Governor Rick Scott and Lieutenant Governor Carlos Lopez-Cantera, Florida is a shining example for the rest of the country to...

Freedom, Free Markets, and Economic Growth

  Why did Sen. Bob Onder (MO) attend the 2015 American Legislative Exchange Council Conference in San Diego? He talks to Travis Brown about how it is important to engage with legislators around the country about freedom, free markets, and economic growth. His home state of Missouri has ranked 49th out of 50th in economic growth over the last 15 years, and he wants to change that static. When competing with other Midwest states for jobs, Missouri is losing to Ohio, who under Gov. Kasich has made significant tax cut gains, and to Michigan, where they have changed the labor laws. Sen. Onder knows that a variety of tax cuts must be made to keep Missouri competitive. As my co-authors and I discuss in An Inquiry into the Nature and Causes of the Wealth of States, taxing income and taxing production is detrimental to growth for a state. But thanks to legislators like Sen. Onder working together with new leadership, Missouri has a lot to be optimistic about making structural reform in the new legislative...

Tax Reform Needs To Rain Down On Maryland

Sen. Gail Bates (MD) talks to Travis Brown at the 2015 American Legislative Exchange Council Conference in San Diego about tax policy changes in Maryland since the election of Governor Larry Hogan. He recently unveiled legislation that fulfills his campaign promise to repeal Maryland’s “rain tax.” Currently, the state requires its largest jurisdictions to charge fees for storm water clean-up. Yes, you read that right: Maryland literally places a tax on the amount of rain that falls. It’s the only state in the nation to do so, and tax-reform-minded leaders like Governor Hogan rightfully find it outlandish. “Repealing the rain tax has nothing to do with our commitment to the bay or our desire to control storm water management,” Hogan said. “It has everything to do with my belief, and the overwhelming majority of Marylanders’ belief, that the state should not be forcing counties to raise taxes on their citizens against their will.” “The rain tax was the straw that broke the camel’s back and it ignited a tax revolution in our state,” he added. Hogan considers the rain tax a “universally despised” tax that made Maryland a national laughingstock. Governor Hogan knows that a variety of tax cuts must be made to keep Maryland competitive. As my co-authors and I discuss in An Inquiry into the Nature and Causes of the Wealth of States, under the leadership of former Governor O’Malley, Maryland became one of nation’s chief culprits in raising taxes ever-higher. But thanks to legislators like Sen. Bates working together with Governor Hogan, there has been more job creation and growth and Maryland is once again open...

Dr. Art Laffer being interviewed by Travis Brown at the 2015 American Legislative Exchange Council (ALEC) Convention on the creation of the “Laffer Curve”

Donald Rumsfeld, Dick Cheney, and Dr. Art Laffer. You may not associate those first two names with fiscal policy, but they were present at the creation of one of the main theoretical constructs of supply-side economics, The Laffer Curve. The three men were having lunch in Washington, D.C., along with Wall Street Journal Report reporter Jude Wanniski, when the conversation turned to how Rumsfeld and Cheney could help President Ford turn the economy around. Dr. Laffer proceeded to whip out a Sharpie and start drawing on his white linen napkin, explaining to the men that while conventional wisdom tells us if you want more revenue, you raise taxes; but what the curve shows us is that if you want more revenue, you are better off lowering taxes to stimulate economic growth. “It’s the same as always. It works. It’s not Republican, it’s not Democratic, it’s not conservative, it’s not liberal, it’s not left-wing, it’s not right-wing. It’s economics. People respond to incentives, and if you make something more attractive, they will do more of it. If you make something less attractive, they will do less of it. If you tax rich people and give the money to poor people, you are going to get lots and lots of poor people and no rich people. The dream in our country has always been to make the poor rich, not to make the rich poor.” – Dr....

Stephen Moore and Dr. Art Laffer discuss Rich States, Poor States and Wealth of States at the 2015 American Legislative Exchange Council (ALEC) Convention in San Diego

Ever used any of the data in Rich States, Poor States? At this year’s American Legislative Exchange Council (ALEC) Convention, co-authors Stephen Moore and Dr. Art Laffer talk about how they come up with much of the intellectual ammunition that goes into the “economic Bible” and some of the facts and figures from the book they co-authored along with Travis Brown and Rex Sinquefield, Wealth of States. Numbers don’t lie – “there has been so much growth in the red states, and so much exodus in the blue states,” said Stephen Moore. In the book, Wealth of States, “four of the largest states in the US – Texas, California, Florida, and New York – account for 1/3 of the population…but since people vote with their feet, they are leaving the blue states of California and New York for Texas and Florida where there is no income tax.” People certainly aren’t leaving beautiful  San Diego for Houston because of the weather. It’s because of simple tax policy. A recent Gallop poll asked, “Where do people want to move from?” Top contenders – Massachusetts, New York, New Jersey, Illinois, Rhode Island, Maryland, and Connecticut. All states that put a high price on work, and improvise their own citizens. States like Texas understand this, and because of the work Rick Perry did while in office Texas created more jobs during the years 2007-13 than ALL other 49 states combined. If you are a legislator interested in learning how you can help implement these changes in your state, watch the video...

Democratic Governor Hassan’s Veto May Soon See Companies And Jobs Fleeing New Hampshire

Live free or . . . move to another state? That’s the question with which New Hampshire companies are grappling, as Democratic Governor Maggie Hassan vetoed a change to the state’s business tax structure that would’ve made New Hampshire friendlier to both large corporations and start-ups alike. Republican lawmakers are decrying the Governor’s decision as anti-business, and companies are concerned as well. The most public face of this ongoing tussle is Planet Fitness. The successful gym franchise, which is headquartered in New Hampshire, came to lawmakers in Mayrequesting a change in tax law. Essentially, the sought-after change would have prevented Planet Fitness from having to pay higher business-profits taxes when the company goes public (a move it is planning in the near future). Planet Fitness’ Director of Public Relations explained that the company had been in New Hampshire for 23 years and would like to stay in the state – but cautioned that “we are working with our advisors and board of directors to explore all options regarding the company’s future in the state.” Planet Fitness reported $279.8 million in total revenue for 2014 and operates about 980 clubs nationwide. Not wishing to play favorites, legislators broadened the bill to affect a variety of businesses, not just publicly held ones. If the bill would’ve made it off of Governor Hassan’s desk, it would have given businesses the opportunity to avoid paying higher taxes on particular gains in value. (If a business chose to not disclose its new value, it would miss out on future tax deductions.) Hassan rationalized her veto by saying that the business tax cuts would result...

PA Democrat Gov. Wolf’s Largest Tax Increase In History Rejected By Both Parties In The House 193-0

Pennsylvania Governor Tom Wolf displayed some serious short-sightedness when making his budget address last month. Pennsylvania literally sits atop an abundance of riches: the natural gas in the Marcellus Shale. Rather than leveraging that wealth in a way that would advantage all working Pennsylvanians, Governor Wolf wants to raise the severance tax on the national gas industry. Such a move would have a chilling effect on the state’s fastest-growing sector. Worse, it would drive jobs and workers out of Pennsylvania and into states that offer energy-boom upside without the high-tax downside. We’re not talking about something that solely affects energy tycoons and “one percenters.” A tax hike on the natural gas industry would set in motion a major loss of integral, supply-chain jobs that help the Pennsylvania middle class thrive. It would also take money that’s now being spent locally and suck it into the black hole that is the state general fund, giving residents far less say over how, where, and why their dollars are spent.  Governor Wolf’s plan does nothing to address the state’s real problem, which springs from the ever-deepening pension crisis. Instead, it makes significant changes to the state tax structure in order to raise an outlandish $4.6 billion in new state spending. In addition to the severance tax that’s essentially a disincentive to extract natural gas in Pennsylvania, the plan includes income- and sales-tax increases that harm workers across every income level. The Pennsylvania House of Representatives liked the governor’s proposal about as much as I do. The proposal failed by a 0-193 vote – not a single state lawmaker wanted to get behind...

Chicago To Apply 9% ‘Netflix Tax’

There should be small print on “Welcome to Chicago” signs – something along the lines of “businesses and innovators not actually welcome.” With its recent, growth-killing hike of the minimum wage and its ever-looming $20 billion pension hole, the Windy City finds itself at a major competitive disadvantage. Mayor Rahm Emanuel and his Department of Finance just made matters worse with the introduction of new tax rules that will notably increase the cost of using popular streaming services like Netflix NFLX -3.28%, Hulu, and Spotify. Desperate for new revenue to fill its dwindling coffers, Chicago is applying a 9 percent tax to what official documents call “electronically delivered amusements” and “nonpossessory computer leases.” Together, this pair of new tax rules amount to a taxation on any city resident who accesses “the cloud” – a move that business owners, digital natives, and everyday consumers of streaming content are finding deeply troubling. These intentionally broad new tax rules affect more than just Chicagoans who want to stream their favorite show on Netflix or play a new album on Spotify. The 9-percent hike also applies to businesses that use could services, such as realtors who access real-time listings and attorneys who rely on Internet court databases. “This is one piece of a whole picture that impacts why business would not want to locate here,” said Michael Reever, vice president of government affairs at the Chicago Chamber of Commerce, in a recent interview with the Chicago Tribune. Going into effect September 1 and expected to generate $12 million annually, this new “cloud tax” is just the most recent example of Chicago politicians taking...