An Inquiry into the Nature and Causes of the Wealth of States: How Taxes, Energy, and Worker Freedom Change Everything

367 Pages·2014·13.696 MB·English

by  Arthur B. Laffer, Stephen Moore, Rex A. Sinquefield, Travis H. Brown

AN INQUIRY
into the Nature and
Causes of the Wealth
of States

AN INQUIRY
into the Nature
and Causes of
the Wealth
of States
How Taxes, Energy,
and Worker Freedom
Change Everything
Dr. Arthur B. Laff er
Stephen Moore
Rex A. Sinquefi eld
Travis H. Brown
Cover image: Flag © iStockphoto.com/nico_blue
Cover design: Wiley
Copyright © 2014 by Arthur B. Laff er, Stephen Moore, Rex A. Sinquefi eld, and
Travis H. Brown. All rights reserved.
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Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
ISBN 978-1-118-92122-7 (cloth)
ISBN 978-1-118-92124-1 (ebk)
ISBN 978-1-118-92123-4 (ebk)
P rinted in the United States of America
10 9 8 7 6 5 4 3 2 1
We dedicate this book to
Professor Colin Campbell of
Dartmouth University and his
late wife Rosemary Campbell,
for their enormous contribution
to our understanding of the
political economics of states. We
especially wish to single out
their paper, A Comparative
Study of the Fiscal Systems
of New Hampshire and
Vermont, 1940–1974, pub-
lished by the Wheelabrator
Foundation in 1976.

Contents
Prologue xiii
Chapter 1 The Fall from Grace: The Story of
States 11 and the Income Tax Adopted 1
The Implementation of an Income
Tax—A Terrible Mistake 1
That Giant Sucking Sound Is People,
Output, and Tax Revenue Fleeing Income Taxes 4
Economic Malaise 4
Misleading Measures 5
Ohio 7
The Story of New Jersey—A Colorful
Example of Opportunity Wasted 10
Lower Tax Revenue 10
The Rhetoric Surrounding Tax Revenue
and the Decline in Public Services 11
The Case of the Disappearing Tax Revenue 12
Connecticut 13
No Bang for the Buck—How Costly Tax
Increases Fail to Result in Better
Provision of Public Services 16
vii
viii Contents
Chapter 2 Economic Metrics 23
Primary Economic Metrics 24
Tax Revenue Performance of All States
over the Past Decade 32
The ALEC-Laffer State Rankings 37
Internal Revenue Service Tax Migration Data 39
Chapter 3 The Nine Members of the Fellowship of the
Ring to Balance Out the Nine Nazgûl 53
An Analysis of the Top Personal Income Tax (PIT) Rates 56
Public Services and the Personal Income Tax 61
The Effects of Oil and Severance Taxes 63
A Longer-Term View of the Data 67
An Analysis of Corporate Income Taxes 69
An Analysis of the Overall Tax Burden 73
An Analysis of the ALEC-Laffer State Economic
Competitiveness Index 76
Chapter 4 Piling On 81
An Analysis of the Property Tax Burden 82
An Analysis of the Sales Tax Burden 82
Estate and Inheritance Taxes 88
Right-to-Work Laws 90
Labor Force Unionization 93
State Minimum Wages 96
Chapter 5 Give unto Caesar 99
New Hampshire—Case in Point 104
Top Traders 121
Real-Time Mobility Index 127
Chapter 6 Why Growth Rates Differ: An Econometric
Analysis of the Data 133
List of Variables 137
Gross State Product Growth: Single-Variable Analysis 141