Your Opinion: Income taxes hurt productivity
Thursday, March 17, 2011
Peter Ferrara is director of policy for the Carleson Center for Public Policy, a Senior Fellow for the Heartland Institute, and director of entitlement and budget policy for the Institute for Policy Innovation. In “The Anachronism of State Income Taxes” (FORBES, March 10), he explains the negative economic impact of income taxes.
“Income taxes are the most economically destructive of all taxes. That is because income levies tax directly the reward for work, savings, investment, and entrepreneurship. With the reward reduced, the incentive for pursuing these economically productive activities is reduced. The result is less work, less saving, less investment, fewer new businesses, less business growth, less job creation, lower wages and income, and lower overall economic growth.
Higher marginal tax rates reduce these incentives more. Lower marginal tax rates reduce these incentives less. A marginal tax rate of zero, as with no income tax, maximizes these incentives, at least as far as the burden of income taxes is concerned.
High income taxes also cause high wealth and net income individuals to leave greedy states for more favorable tax climates, particularly the states with no income taxes. The original state then loses all the tax revenue from these fleeing high wealth taxpayers.
Experience and economic studies bear this out. The latest work was produced by Art Laffer, Steve Moore and Jonathon Williams in their annually recurring volume Rich States, Poor States, published by the American Legislative Exchange Council (ALEC).”
Does your elected official in Jefferson City know about this report? Tax reform should be based on research. HJR will help Missouri become more competitive. Visit http://blogs.forbes.com/peterferrara/2011/03/09/theanachronism-of-state-income-taxes/.
Then call your representative and share your knowledge.