Building stronger state economies that create jobs and expand opportunity will require sensible, forward-looking state fiscal policies. States need to invest adequately in education, health care, transportation, and workforce development. To do that, they need to make decisions about how to raise and spend revenues with an eye toward the future.
Differences in tax levels among states have little to no effect on whether and where people move, contrary to claims by some conservative economists and elected officials.
As other states recover from the recent recession and turn toward the future, Kansas’ huge tax cuts have left that state’s schools and other public services stuck in the recession, and declining further — a serious threat to the state’s long-term economic vitality. Meanwhile, promises of immediate economic improvement have utterly failed to materialize.
Some policymakers, organizations, and individual economists assert that a consensus exists in the academic literature that state tax cuts boost state economies and that state tax increases harm them, but no such consensus exists.
Policymakers in a number of states are promoting deep cuts in personal income taxes as a prescription for economic growth — an approach that has not worked particularly well in the past and is not supported by the preponderance of the relevant academic literature.
States Likely Could Not Control Constitutional Convention on Balanced Budget Amendment or Other Issues
July 16, 2014
Updated June 24, 2014
Revised May 21, 2014
Revised May 20, 2014
May 1, 2014
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Strengthening state economies and creating jobs — now and into the future — will require sensible, forward-looking state fiscal policies. States need to invest adequately in education, health care, transportation, and workforce development. To do that, they need to generate sufficient revenue, and they need to do so in an equitable and transparent manner. Large tax cuts, such as eliminating income taxes for corporations and high-income people, would impair a state’s ability to remain flexible in the face of changing circumstances. Such plans not only would fail to produce the positive economic results that supporters promise, but also would make it increasingly difficult to pursue the policy options that do create jobs over the short- and long-run.