More proof on how to grow an economy, not that ideologues will care

The President, the media, the CPUSA, the Democrats, and all their bleating followers do not seem to understand basic economics.  They don’t and they don’t want to.  Their own logic and emotional response trumps any facts one might present.  As one of my liberal friends once said, “It just makes sense, if the government needs money they must raise taxes, it defies logic that lower taxes could result in more government revenue.”

But of course he meant other people’s taxes needed to increase, not his.  All the facts in the world about how people are less productive, take fewer risks, hire fewer employees (who in turn would have paid taxes), hide their money, invest outside the high tax areas, or leave high tax areas, all of this was illogical or was simply dismissed as untrue.

Here is yet another case study.  High tax cities saw population reductions and slow growth.  Low tax cities saw population growth and the healthiest economic growth in the United States.  More growth, especially in personal income and increased employment mean more tax revenues for all levels of government.

Here is an excerpt from a paper you really should read.

Why Some Cities Are Growing and
Others Shrinking

by Dean Stansel
 

Over the last three decades, large cities like Pittsburgh, Detroit, Cleveland, Buffalo, and Toledo have seen their populations shrink, while areas like Houston, Atlanta, Dallas, Tampa, and Phoenix have seen their populations grow rapidly. Examining the policy differences between high-growth and low-growth areas can provide evidence that may help declining cities reverse their fortunes.

In 1980, Austin, Texas, and Syracuse, New York, were roughly the same size. The Austin metro area had a population of about 590,000, and the Syracuse metro area had about 643,000 residents. By 2007, Austin’s population had increased by more than 1 million while Syracuse’s population had been stagnant. That same disparity exists when one examines the growth of employment and real personal income. Another disparity between the two areas is the tax burden. State and local taxes accounted for nearly 13 percent of personal income in Syracuse but only about 9 percent in Austin.  Although there are numerous factors that can influence the growth of individual economies, one finds a consistent relationship between low taxes and high economic growth in metropolitan areas, in states, and in nations.

This article details that relationship between taxes and growth for the 100 largest U.S. metropolitan areas. In the 10 highest-tax metro areas, the state and local tax burden accounted for about 12.4 percent of personal income. In those same areas, population grew by 21.3 percent from 1980 to 2007, employment grew by 40.1 percent, and real personal income grew by 75.5 percent. In contrast, taxes were only 8.3 percent of personal income in the 10 lowest-tax areas.  The economic growth in those areas was much faster. Population grew by 64.4 percent, employment by 107.6 percent, and real personal income by 157.3 percent.

The contrasting experiences of Austin and Syracuse occurred in countless other areas as well. This article provides 14 additional examples of pairs of metro areas that had similar tax and growth patterns.1  The experiences of all 15 pairs of metropolitan areas provide valuable lessons for distressed areas everywhere. Keeping tax burdens low appears to be an important ingredient in the recipe for economic prosperity. If high-tax, low-growth metro areas like Detroit, Milwaukee, Buffalo, and Syracuse want to be more like high-growth areas such as Dallas, Tampa, San Antonio, and Austin, they should lower their onerous burden of taxation and bring spending under control.

For the entire article click here.
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    • Ben
    • July 31st, 2011

    Your friend who doesn’t understand how more taxes actually work against the flow of federal revenue shows a general ignorance about basic economics. If he was honest about it, then he would be ashamed of his ignorance.

    Hell, even Kennedy understood this basic truth which is that if Americans have more disposable income, they will spread it on the economy. This in turn translates into more revenue for the gov’t through taxes based on economic activity.. Depriving Americans of that disposable income is to derive the gov’t from that revenue. For the Keynesian’s it looks like more taxes are in order.

    For those with common sense, it looks like American’s have been deprived of their economic freedoms.

    • Reality has a Liberal Bias / It’s not even close to 100%, give me a break. And Obama is *cutting* taxes for middle-class Americans.I’ve been at the top tax bcrekat, and it didn’t bother me, since I was still making a ton of money.

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