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Willisms

« Twilight Zone Economics. | WILLisms.com | Iran Puts Brakes On Female Racing Champ »

Trivia Tidbit Of The Day: Part 356 -- State Tax Revenues Are Up.

More Evidence Of Economic Strength-

State tax revenues are up again. The Rockefeller Institute, a few weeks ago, reported "broad strength" in tax revenue growth (.pdf):

*State tax revenue totaled $183.7 billion in the April-June 2006 quarter, up 9.9 percent from the same period in 2005.

* After adjusting for inflation and legislated tax changes, growth was 4.1 percent, the fastest real adjusted growth since the second quarter of 2005.

*Nominal revenue growth among the regions generally followed a familiar pattern: strongest in the Rocky Mountain states (21.9 percent) and Southwest (16.1 percent), and weakest in the Great Lakes (4.3 percent).

* National employment growth was 1.4 percent this quarter versus one
year ago, with the strongest growth continuing to be in the western regions and the weakest in the Great Lakes and New England states.

Taking the ten best and worst state tax climates, the revenue growth comparison looks like this:

1. Wyoming: 1.5%
2. South Dakota 8.1%
3. Alaska: 24%
4. Nevada 6.2%
5. Florida 2.2%
6. Texas 13.7%
7. New Hampshire 8.5%
8. Montana 43.9%
9. Delaware 9.7%
10. Oregon 21.2%

Average: 13.9% revenue growth, April-June 2005 to April-June 2006.

41. Minnesota 10%
42. Maine 15.4%
43. Iowa 7.5%
44. Nebraska 11.9%
45. California 14.1%
46. Vermont 14.1%
47. New York 11.6%
48. New Jersey 5.8%
49. Ohio -0.8%
50. Rhode Island 7.7%

Average: 8.99% revenue growth, April-June 2005 to April-June 2006.

Shouldn't the high tax states, the ones with income taxes and the rest, be destroying the low tax states (often without any income taxes whatsoever) in tax revenue growth during this period?

And what about employment growth?

1. Wyoming: 3.6%
2. South Dakota 2.4%
3. Alaska: 1.5%
4. Nevada 5.1%
5. Florida 3.2%
6. Texas 2.6%
7. New Hampshire 1.1%
8. Montana 2.1%
9. Delaware 1.6%
10. Oregon 3.6%

Average: 2.68% employment growth.

41. Minnesota 1.9%
42. Maine 0.2%
43. Iowa 1.7%
44. Nebraska 1.7%
45. California 1.5%
46. Vermont 0.6%
47. New York 0.8%
48. New Jersey 0.9%
49. Ohio 0.6%
50. Rhode Island 0.5%

Average: 1.04% employment growth.

Policies matter. High taxes harm economies, all without raising much additional revenue for governments. Low taxes benefit economies.

So here's what we can learn from this information:

A. The national economy is strong. Strong state tax revenue growth is yet another indicator of that strength.

B. Some state economies are stronger than others. States with lower taxes are adding more jobs, faster, than states with higher taxes.

C. States with higher taxes did not really see their government coffers fill any faster than states with lower taxes.

To break it down into even more basic terms, high taxes = bad; low taxes = good. The evidence, already overwhelming and obvious, continues to accumulate.

-------------------------------------

Previous Trivia Tidbit: Tax Policy Matters.

Posted by Will Franklin · 17 October 2006 07:34 PM

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