State Economies

A Guide to State Fiscal Policies for a Stronger Economy

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.

 

State Taxes Have a Negligible Impact on Americans' Interstate Moves

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.

Lessons for Other States from Kansas' Massive Tax Cuts

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.

Academic Research Lacks Consensus on the Impact of State Tax Cuts on Economic Growth

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.
 

State Personal Income Tax Cuts: A Poor Strategy for Economic Growth

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.
 

Background

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.

By the Numbers

Largest State Budget Shortfalls on Record
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