The 21st-century path to state economic prosperity, increased wages at every income level, employer re-investment, and job creation is in fact pretty straightforward. It is not a matter of wealth redistribution; it is a matter of wealth creation. It is not about slicing up a shrinking pie; it is about creating a bigger pie through economic expansion.
The pro-growth policy path is clear: cut income taxes on small business and their workers; broaden the sales tax base; wipe out corporate loopholes and cronyism that come in the form of tax breaks for favored industries; and provide sales tax rebates or “pre-bates
to low-income households. When states grow, property taxes and sales taxes are multiplied by a growing gross state product, which in turn increases government revenue and its ability to provide more social services.
Two actions taken this week by Illinois Governor-Elect Bruce Rauner indicate that he plans make good on his pro-growth campaign promises. And Illinoisans across the state must be breathing a heavy sigh of relief.
Illinois’ state-run pension plans are quite simply bleeding the state dry. Illinois’ pension debt now is well over $100 billion. According to an Illinois Policy Institute (IPI) report released this week, the state contributes the equivalent of up to 127 percent of its state employee salaries just to meet the defined-benefit pension systems’ obligations. In the average private sector, where employers have shifted to defined-contribution plans, the employer contributes the equivalent of 9 to 10 percent of a worker’s salary each paycheck.
Last week, the Kansas Department of Labor and the U. S. Bureau of Labor Statistics (BLS) released October 2014 jobs and earnings reports that are sure to galvanize the nationwide push for sensible state tax policy.
In the two years since Kansas’ tax-reform measures went into effect, the promises of Governor Sam Brownback’s administration are becoming a reality. I challenge tax-and-spend naysayers to dispute the following facts:
- 8,400 seasonally adjusted non-farm jobs have been added since September;
- Workers saw their earnings grow by 3.3 percent in a year; and
- The Sunflower State’s unemployment rate is now 4.4 percent, down from 5.2 percent a year ago.
Last week, voters across the country sent a powerful message by electing (and re-electing) pro-growth leaders. Incumbent Republican governors Scott Walker of Wisconsin, Sam Brownback of Kansas, Rick Snyder of Michigan, John Kasich of Ohio, Rick Scott of Florida, and Paul LePage of Maine led by example by taking the long view on fiscal policies — and they were duly rewarded with the opportunity to advance their reform initiatives over the next four years. And in the blue state of Illinois, Republican candidate Bruce Rauner handily beat sitting Gov. Pat Quinn and will become the first Republican governor elected since 1998.
These are all truly extraordinary accomplishments, considering the fact that unions spent an estimated $80 million in mid-term election expenditures.
While the state-level rivalries in competitive economics may not enjoy the mass appeal of the World Series, The Voice, or Shark Tank, annual reports that rank each state’s economic position provide valuable insights for voters as we approach this Tuesday’s mid-term elections.
Each year, several national and state-based policy think tanks review fiscal policies by looking at a variety of measures, including state budgets, tax burden, growth trends, and forecasting, and then publish those results along with competitive advantage (or disadvantage) ranking systems. With about seven gubernatorial races being called as toss-ups and with 10 key state U.S. Senate races hanging in the balance, a clear analysis of one of this year’s pro-growth all-stars may help inform undecided voters.
Last week CATO Institute released its biennial Fiscal Report Card on America’s Governors, which provides some startling facts that should have voters across the country seriously considering how they vote on November 4 and in the coming years – and, quite possibly, where they will choose to live, operate their businesses, and raise their children.
With the exception of Virginia and Alaska (for reasons stated in the report),the CATO guide examines each state’s spending and taxing policies across three areas: spending, revenues and tax rates.
Tax revenue reports are tools that provide a useful, albeit narrow, snapshot of a state’s economic position each month. They are meant to be informative within a broader context of quarterly and yearly reporting instruments.
In a highly charged political environment, such as what we find in Kansas, Illinois, and a number of other primary elections across the country, short-term glimpses become highly politicized. As we approach the November election cycle, voters need to take into consideration the preponderance of evidence that shows that states with long-term, pro-growth tax policies perform better across all measurable indicators than high-tax, big government states.
by Rex Sinquefield Forbes.com Contributor
Last week, Illinois Governor Pat Quinn signed a bill that places on the November 4 ballot a non-binding tax referendum that has many of us scratching our heads. If Governor Quinn is truly interested in finding out how voters feel, then the fuzzy language of the referendum will not serve him well. What seems to be crystal clear is that, in light of the state’s economic crisis, the governor hopes to drive more of his supporters to the polls on Election Day.
And it looks like Governor Quinn has every reason to be worried. On the same day that Quinn signed the bill into law, a Rasmussen poll showed that the Republican challenger, Bruce Rauner, had a five-point lead, an additional two percentage points higher than in April.
by Forbes contributor, Rex Sinquefield
This week one of the key Democratic Party strongholds voted to reduce income taxes and expand the sales tax base. The District of Columbia Council, which in 2012 supported President Barack Obama over challenger Mitt Romney by a wide margin of 13 votes to 1 (in a city where 90.9 percent of voters selected Obama), passed a pro-growth tax reform package that, if signed into law will:
- expand the sales tax base,
- reduce income taxes for individuals and businesses,
- increase the Earned Income Tax Credit to 100%,
- recouple estate taxes to federal levels, and
- save taxpayers about $67 million per year.
Mayor Vincent Gray has until July 8th to approve or veto the bill. Considering the near-unanimous (12 to 1) Council vote, indications are good that this bill will become law in our nation’s capital.