Fiscally conservative states pulling away from the pack
Last week, Texas made news for tremendous budgetary and economic projections by the state’s comptroller. Less widely discussed are the positive fiscal situations in which Indiana, Iowa, Florida, and Michigan find themselves. These states, empowered by sound tax and spending policies, are the antithesis of flailing states like high-tax, high-spending California and Illinois.
As of this week, it looks like the good tax policies of these several states may have two new friends in the near future. From Erika Johnsen at Hot Air comes news that Nebraska’s governor is looking at eliminating all corporate and income taxes in his state. Of course, special interests are opposing this plan – their exemptions are more important than a fair, efficient tax code. Johnsen sums it up nicely in her post:
States that do without having employing all three of the most common tax methods (income, sales, and corporate) tend to be more competitive, and the Nebraska code currently harbors a lot of exemptions for farmers, ranchers, and large agribusiness, some of the state’s biggest industries. Simplifying the tax code and breaking up the influence of large and organized special interests is something for which I won’t hold my breath out of the Obama administration, but at least certain states are brainstorming and doing what they can to improve their own economic outlooks.
Perhaps more relevantly for national politics is the welcome proposal by Louisiana governor Bobby Jindal to eliminate the same taxes in his state. From Daniel Mitchell at Hot Air’s sister site, Townhall.com:
He’s already implemented some good school choice reform, notwithstanding wretched and predictable opposition from the state’s teachers’ union.
Now he wants to get rid of the state’s personal and corporate income taxes.
This would be a big and bold step, and I shared some evidence recently showing that states with no income tax grow faster and create more jobs.
Correctly, Mitchell mostly shrugs at the idea that Governor Jindal is only looking at this tax proposal for political reasons:
Some people probably think Jindal is pushing this agenda merely because he may run for President in 2016.
My attitude is “so what?”
So long as he implements better policy, I don’t care if he’s motivated by a Ouija board.
But since he has a reputation for being a policy wonk, I suspect his motivations are to make Louisiana a more prosperous state.
And if bold reform also happens to increase his national stature, I’m sure he’s more than happy to reap any political benefits.
If he succeeds, Louisiana will enjoy more growth.
Equally important, as I stated in the interview, his success would show that Obama’s class-warfare agenda may have some appeal in basket-case states such as California, but it doesn’t have much support among people who understand that growth is the only effective (and moral) way of achieving a better life.
As the federal government looks to take more of our money to feed spending addictions, it is increasingly up to the states to enact sustainable, fiscally-sound policies to increase the livelihoods of their citizens. Texas, Iowa, Indiana, Florida, and Michigan have done so in dramatic fashion, and it looks like Nebraska and Louisiana may be joining the crowd.