While liberals on both sides of the aisle think that we can tax and spend ourselves out of this economic mess, analyses published by the Tax Foundation and the American Legislative Exchange Council show that states that tax less also spend less and have better economies than those states that tax more. The Wall Street Journal reported:
“States that allow taxpayers and employers to keep more of their earnings are reaping the benefits. States without an income tax have significantly better growth in private sector GDP (59% versus 42%) over the last 10 years. They increased the number of jobs by 4.9% while jobs in the rest of the states declined by 2.6%. States without an income tax gained population (+5.5%) from domestic migration (U.S. residents moving in and out of states) while all other states as a whole lost 1.3% of population between 2000 and 2009.”
The converse was also true that states that taxed more also spent more and had worse economies than the rest.
To conservatives, these analyses merely state the obvious. It really doesn’t take a genius to realize that as taxes increase, consumers will consume less and therefore contribute to a downsizing economy. They will consume less because they will have less money to spend. Of course, even in those circumstances, government officials and economists will try to encourage people to spend their money or go into debt in order to “save the economy.” But fiscal conservatives don’t live that way. If the money’s tight, and the economy is down, then it’s time to save as much as possible, not spend. Our personal and familial economy is far more important than the national economy.