An Inquiry into the Nature and Causes of the Wealth of States: How Taxes, Energy, and Worker Freedom Change Everything

Yes, State Tax Rates Matter A Lot The pages of this book contain the ammunition you need to end the debate over state tax policy once and for all. Taxing the wealthy to give to the poor drives the wealthy—along with their tax dollars and their businesses—across state lines. An Inquiry into the Nature and Causes of the Wealth of States presents the data that prove it. There is no substitute for facts. Inside, you'll find straightforward evidence that high state and local tax burdens can destroy prosperity in states of any size. If you're looking for investment locations, considering reform policy, or planning to relocate to a state that looks out for your interests, you'll want to see how the numbers really fall. This data-based exposé reveals just how damaging state and local taxation can be to economic growth and wealth creation. With its rare, articulate presentation, An Inquiry into the Nature and Causes of the Wealth of States is one of the most important economic treatises in recent memory.

Prologue Chapter 1: The Fall from Grace The Story of States 11 and the Income Tax Adopted The Implementation of an Income Tax – A Terrible Mistake That Giant Sucking Sound is People, Output and Tax Revenue Fleeing Income Taxes Economic Malaise Misleading Measures Ohio The Story of New Jersey – A Colorful Example of Opportunity Wasted Lower Tax Revenue The Rhetoric Surrounding Tax Revenue and the Decline in Public Services The Case of the Disappearing Tax Revenue Connecticut No Bang for the Buck – How Costly Tax Increases Fail to Result in Better Provision of Public Services Education Results for the 11 States that Adopted the Income Tax Hospital Services Police Protection Welfare Highways Chapter 2: Economic Metrics Primary Economic Metrics Tax Revenue Performance of All States over the Past Decade The ALEC–Laffer State Rankings Internal Revenue Service Tax Migration Data Chapter 3: The Nine Members of the Fellowship of the Ring to Balance Out the Nine Nazgûl An Analysis of the Top Personal Income Tax Rates Public Services and the Personal Income Tax The Effects of Oil and Severance Taxes A Longer–Term View of the Data An Analysis of Corporate Income Taxes An Analysis of the Overall Tax Burden An Analysis of the ALEC–Laffer State Economic Competitiveness Index Chapter 4: Piling On An Analysis of the Property Tax Burden An Analysis of the Sales Tax Burden Estate and Inheritance Taxes Right–to–Work Laws Labor Force Unionization State Minimum Wages Chapter 5: Give Unto Caesar New Hampshire – Case–in–Point Top Traders Real–Time Mobility Index Chapter 6: Why Growth Rates Differ: An Econometric Analysis of the Data List of Variables Gross State Product Growth: Single Variable Analysis Gross State Product Growth: Two Variable Analysis Gross State Product Growth: Three Variable Analysis Population Growth: Single Variable Analysis Population Growth: Two Variable Analysis Population Growth: Three Variable Analysis Population Growth: Four Variable Analysis Conclusions Annotated Econometric Bibliography Key Quotes from Bibliography Chapter 7: Fiscal Parasitic Leakages Texas versus California A Tale of Two States – A 58 Bullet Point Summary The November 2012 Elections in California and Texas Economic Performance: California, Texas, and the U.S. A Brief Note on Poverty Metrics The Texas Oil Boom and California’s Oil Bust: A Clash of Economic Cultures An Overview of Total State & Local Government Revenues – Texas and California Texas, California, and the U.S.: A Comparison of Tax Revenue and Debt Financing Policy Variables Affecting Growth The Relationship between Taxation, Spending, and the Achievement of Policy Objectives – A Story of “Parasitic” Leakages Intergovernmental Revenues, Federally–Mandated Social Services, and State Welfare, Medicaid, and Food Stamp Programs The Provision of Public Services by State & Local Governments: The Number of State & Local Full–Time Equivalent Government Employees per 10,000 of Population, Their Average Annual Salaries and Wages, and Total Cost as a Percent of State Gross State Product The Performance of State and Local Public Education Highways: California vs. Texas Prisons: California and Texas Conclusion Chapter 8: Au Contraire, Mon Frère Criticisms of Our Work – Our Response Conflicts of Interest and Policies Taxes and Other Supply–Side Policy Variables Don’t Affect Population and Gross State Product Growth Growth is a Move from North to South, from Clouds to Sunshine, from Cold to Warm Growth is Predominantly a Matter of Education and Not Taxes and Other Economic Policy Measures Personal Income per Capita and Median Income Growth as Measures of Success Show Taxes Don’t Matter Tax Rate Cuts Are Public Service Cuts Other Factors Affect Population Growth—Oil, Sunshine, Accessible Suburbs, Etc., Therefore Taxes, Right–to–Work Laws and other Supply–Side Variables Don’t Correlations between Tax Rates and Growth Reflect a Simultaneous Equation Bias (Reverse Causation)—i.e. Growth Causes Tax Cuts, Not the Reverse There Are High Tax States That Outperform Low Tax States, Therefore the Supply–Side Theory is Wrong The Oklahoma Argument Against Tax Cuts Income Distribution Becomes More Even With Progressive High–Rate Tax Codes The Probity of the ALEC–Laffer Measures is Nonexistent, Therefore Their Policy Prescriptions are Wrong Federal Tax Rates are More Important Than State Tax Rates and Therefore State Tax Rates Don’t Matter The Wealthy Used Public Resources, and They—Not Others—Should Pay For Those Public Resources; We Need More Progressive Taxes, Not Less When is Enough Evidence Enough?—If the Facts were Reversed, We Would Concede Notes Bibliography Acknowledgments About the Authors Index

ARTHUR B. LAFFER, PhD, is the founder and chairman of Laffer Associates, an economic research firm focusing on interconnecting macroeconomic, political, and demographic changes. STEPHEN MOORE is chief economist at The Heritage Foundation. He focuses on budget, tax, and monetary policy. REX A. SINQUEFIELD was a co-founder and director of Dimensional Fund Advisors LP. Since retirement, he has become one of Missouri's leading philanthropists and a dedicated supporter of public policy change. TRAVIS H. BROWN is the CEO and co-founder of Pelopidas, LLC, a public affairs and issue-advocacy firm. He frequently contributes to Fox & Friends and Forbes.com and is the author of How Money Walks .