Taxes, Spending, and Economic Performance

No big surprises here. The private sector creates value, the public sector spends it. The more of the former means the latter doesn’t go broke. Funny how this gets turned around by the “You didn’t build that!” ideologues.

Excerpt from the WSJ. Full article here. (Subscription req’d)

States that Spend Less, Tax Less—and Grow More

States with an income tax spent 42% more per resident in 2011 than the nine states without an income tax.

In the midst of a dismal recovery where every job counts, one fact stands out: States that tax less achieve better economic performance. Conventional thinking (at least within government) says that low state taxes are dependent upon having access to unusual revenue sources, but that’s not it. A state could be awash in oil and gas severance taxes and still have a high tax burden if the government will not exercise restraint.

The secret to having low taxes is controlling spending, and that’s exactly what low-tax-burden states do.