States that raise taxes on wealthy residents to pay for new social programs risk jeopardizing job and income growth, according to Stephen Moore, a distinguished visiting fellow at the Heritage Foundation.
"Blue states such as California, Illinois, Delaware, Connecticut, Hawaii, Maryland and Minnesota adopted this very strategy, and they raised taxes on their wealthy residents," Moore wrote in an article for The Washington Times. "How did it work out? Almost all of these states lag behind the national average in growth of jobs and incomes."
According to Moore, states that cater to the poor by raising taxes, dolling out high welfare benefits and raising minimum wages "tend to be the places where the rich end up the richest and the poor the poorest."
Moore recently co-authored a report, "Rich States, Poor States," for the conservative nonprofit American Legislative Exchange Council, which found "that five of the highest-tax blue states in the nation - California, New York, New Jersey, Connecticut and Illinois - lost some 4 million more U.S. residents than entered these states over the last decade. Meanwhile, the big low-tax red states - Texas, Florida, North Carolina, Arizona and Georgia - gained about this many new residents," he wrote.
The states with the least regressive tax laws had an average population growth from 2003 to 2013 that was lower than the national average, while the 10 most highly regressive tax states, nine of which have no income tax, experienced population growth on average 4 percent higher than the national average.
"Why was that?" Moore questioned. "Because states without income taxes have twice the job growth of states with high tax rates."
He continues: "Ohio University economist Richard Vedder and I compared the income gap in states with higher tax rates, higher minimum wages and more welfare benefits with states on the other side of the policy spectrum. There was no evidence that states with these liberal policies had helped the poor much and, in many cases, these states recorded more income inequality than other states as measured by the left's favorite statistic called the Gini Coefficient."
"The 19 states with minimum wages above the $7.25 per hour federal minimum do not have lower income inequality. States with a super minimum wage - such as Connecticut ($9.15), California ($9.00), New York ($8.75), and Vermont ($9.15) - have significantly wider gaps between rich and poor than states without a super minimum wage."
According to a recent report by the Institute on Taxation and Economic Policy, every state places a higher effective tax rate on the poor than it does the rich, and a few of the nation's most progressive states are among the worst in terms of regressively taxing the middle and lower class.
In 2012, Business Insider conducted an analysis on tax rates over the past century, and concluded that "super-high tax rates on rich people do not appear to hurt the economy or make people lazy: During the 1950s and early 1960s, the top bracket income was over 90 percent - and the economy, middle-class and stock market boomed."
"Super-low tax rates on rich people also appear to be correlated with unsustainable sugar highs in the economy--brief, enjoyable booms followed by protracted busts. They also appear to be correlated with very high inequality," Business Insider said.
