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There Are 11 States In The United States That In The Last 50 Years Instituted An Income Tax. So I Looked At Each Of Those 11 States Over The Last 50 Years, And I Took Their Current Economic Metrics And Their Metrics For The Five Years Before They Put In The Progressive Income Tax... Every Single State That Introduced A Progressive Income Tax Has Declined As An Overall Share Of The U.s. Economy.

-Arthur Laffer

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There Are 11 States

Arthur Laffer

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There Are 11 States In The United States That In The Last 50 Years Instituted An Income Tax. So I Looked At Each Of Those 11 States Over The Last 50 Years, And I Took Their Current Economic Metrics And Their Metrics For The Five Years Before They Put In The Progressive Income Tax... Every Single State That Introduced A Progressive Income Tax Has Declined As An Overall Share Of The U.s. Economy.

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What I'm Not Saying Is That All Government Spending Is Bad. It's Not - Far, Far From It, But There Is No Free Lunch, As A Former Colleague Of Mine Used To Say. There Is No Public Tooth Fairy. Father Christmas Does Not Work On The Treasury Staff This Year. You Can Never Bail Someone Out Of Trouble Without Putting Someone Else Into Trouble.

With The Shrinking Of The Us Economy, And It's Shrinking Very Rapidly, You Not Only Have More Money, But You Also Have Fewer Goods. That's A Classic Double-whammy On Inflation.

There Are 11 States In The United States That In The Last 50 Years Instituted An Income Tax. So I Looked At Each Of Those 11 States Over The Last 50 Years, And I Took Their Current Economic Metrics And Their Metrics For The Five Years Before They Put In The Progressive Income Tax... Every Single State That Introduced A Progressive Income Tax Has Declined As An Overall Share Of The U.s. Economy.

And You Can't Have A Prosperous Economy When The Government Is Way Overspending, Raising Tax Rates, Printing Too Much Money, Over Regulating And Restricting Free Trade. It Just Can't Be Done.

If You Look At The Performance Of The Zero-income-tax-rate States And The Highest-income-tax-rate States, I Believe A Large Amount Of Their Difference Is Due To Taxes. Not Only Is It True Of The Last Decade, But I Took These Numbers Back 50 Years. And, There's Not One Year In The Last 50 Where The Zero-income-tax-rate States Have Not Outperformed The Highest-income-tax-rate States.

And Just Remember, Every Dollar We Spend On Outsourcing Is Spent On U.s. Goods Or Invested Back In The U.s. Market. That's Accounting.

There Are Several States That Move From Karl Marx-like Policies To Adam Smith-like Policies And Back Again In A Weekend. So For The States With Huge Volatility In Their Income Tax Policies Over Time, The Differences In Growth Rates In Those Periods Are Really Amazingly Consistent With Tax Rates Really Mattering.

Let Me Just Try To Give You Sort Of The Intuitive One Here On The Stimulus Funds. If You Have A Two-person Economy - Let's Imagine We Have Two Farms, And That's The Whole World, Just Two Farms. If One Of Those Farmers Gets Unemployment Benefits, Who Do You Think Pays For Him? Am I Going Way Over Your Heads Today?

We Are Having The Single Worst Recovery The U.s. Has Had Since The Great Depression. I Don't Care How You Measure It. The East Coast Knows It. The West Coast Knows It. North, South, Old, Young, Everyone Knows It's The Worst Recovery Since The Great Depression.

There Are Lots Of Other Things That Affect State Growth Besides State Taxes. However, The Reason I Look At Taxes Is Because These Are Policy Variables That Can Be Changed By State Governments In Order To Get Better Results Than They Otherwise Had.

People Can Also Change The Timing Of When They Earn And Receive Their Income In Response To Government Policies.

The Tax Rate Increases Reduce Economic Growth; They Shrink The Pie; They Cause More Poverty, More Despair, More Unemployment, Which Are All Things Government Is Trying To Alleviate With Spending.

It Is Not True That Congress Spends Money Like A Drunken Sailor. Drunken Sailors Spend Their Own Money. Congress Spends Our Money.

Sound Money Is The Sine Qua Non Of A Prosperous Society.

You Know, Without China There Is No Wal-mart And Without Wal-mart There Is No Middle Class And Lower Class Prosperity In The United States.

The Income Effects In An Economy Always Sum To Zero.

I Mean, Everyone Agrees With Stress Tests For Banks. I Mean That's Clear. But Banks Should Do That On Their Own. And They Should Worry About Their Own Capital Functioning. That's What They Should Do. It Shouldn't Be A Government Function.

Let's Take The Nine States That Have No Income Tax And Compare Them With The Nine States With The Highest Income Tax Rates In The Nation. If You Look At The Economic Metrics Over The Last Decade For Both Groups, The Zero-income-tax-rate States Outperform The Highest-income-tax-rate States By A Fairly Sizable Amount.

You Want To Prove That Milton Friedman Is A Fascist? It's Easy. Quote Him.

The Zero-income-tax-rate States Have Far Faster Growth In Tax Revenues Than Did The States With Highest Income Tax Rate Over This Period.

Government Spending Is Taxation. When You Look At This, I've Never Heard Of A Poor Person Spending Himself Into Prosperity; Let Alone I've Never Heard Of A Poor Person Taxing Himself Into Prosperity.

If You Like The Post Office And The Department Of Motor Vehicles And You Think They're Run Well, Just Wait Till You See Medicare, Medicaid And Health Care Done By The Government.

When You Look At The World, Everyone In The World Who Cares About His Or Her Family Wants To Have A Major Portion Of Their Assets In The United States Because We Are The Growth Country And The Freedom Loving Country.

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It Has Always Amazed Me How Tax Cuts Don't Work Until They Take Effect. Mr. Obama's Experience With Deferred Tax Rate Increases Will Be The Reverse. The Economy Will Collapse In 2011.

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