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Wall
Street Journal
Laffer
and Moore: The Red-State
Path to Prosperity
Blue states with high taxes are
struggling to compete for businesses and workers.
By Arthur B. Laffer & Stephen
Moore
You
can tell a lot about prosperity
in America by observing the places people are moving to and where they
are
packing up and moving from. New Census Bureau data on metropolitan
areas
indicate that the South and the Sunbelt regions continue to grow, while
the
Northeast and Midwest continue to shrink.
Among
the 10 fastest-growing metro
areas last year were Raleigh, Austin, Las Vegas, Orlando, Charlotte,
Phoenix,
Houston, San Antonio and Dallas. All of these are in low-tax,
business-friendly
red states. Blue-state areas such as Cleveland, Detroit, Buffalo,
Providence
and Rochester were among the biggest population losers.
This
migration isn't accidental.
Workers and business owners are responding to clear economic
incentives. Red
states in the Southeast and Sunbelt are following the Reagan model by
reducing
tax rates and easing regulations. They also offer right-to-work laws as
an
enticement for businesses to come and set up shop. Meanwhile, the blue
states
of the Northeast, joined by California, Minnesota and Illinois, are
implementing the Obama model of raising taxes on businesses and the
wealthy to
fund government "investments" and union power.
The
contrast sets up a wonderful
natural laboratory to test rival economic ideas.
Consider
the South. We predict that
within a decade five or six states in Dixie could entirely eliminate
their
income taxes. This would mean that the region stretching from Florida
through
Texas and Louisiana could become a vast state income-tax free zone.
Three
of these states—Florida,
Texas and Tennessee—already impose no income tax. Louisiana and North
Carolina,
both with bold Republican governors and legislatures, are moving
quickly ahead
with plans to eliminate theirs. Just to the west, Kansas and Oklahoma
are also
devising plans to replace their income taxes with more growth-friendly
expanded
sales taxes and energy extraction taxes. Utah, while not a Southern
state,
leads the tax-cutting pack under Republican Gov. Gary Herbert.
Read
the rest of the article at the
Wall Street Journal
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