Jordan Candler / May 6, 2015

Republican Governors Must Resist Tax Allurement

Last week, the Commerce Department released the initial estimate for first quarter GDP, which came in at an alarmingly low 0.2%. If revisions follow last year’s trend — GDP for the first three months of 2014 eventually dropped from 0.1% at first glance to -2.1% — it’s possible the economy actually contracted. Suffice to say, the economy, though improved, still lacks the all-important stability needed for a sustainable recovery. Coupled with wages that, at best, remain stagnant, it’s not exactly the best time for governors to be thinking about tax increases. Yet that’s exactly what’s on some state leaders’ agendas, and it’s not confined to Democrats. The Wall Street Journal reports, “About a dozen states — including several led by Republican governors — are considering significant tax increases this year, despite the success of antitax conservatives in the 2014 elections.” Among them is Michigan Gov. Rick Snyder, whose constituents this week soundly defeated his proposal to increase the state’s sale tax to 7%. In a new Heritage Foundation research paper, economists Stephen Moore, Arthur Gaffer and Joel Griffith explain “Why Red States Are Getting Richer and Blue States Poorer.” Most importantly, they found, “Right-to-work states substantially outperform non–right-to-work states, and states with no or low income taxes have a much better economic record than high-income-tax states.” Most of the nation’s 31 Republican governors are embracing pro-growth policies. But it’s important for renegades to be reminded about the consequences of succumbing to the allure of tax revenue.

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