Let's take the nine states that have no income tax and compare them with the nine states with the highest income tax rates in the nation. If you look at the economic metrics over the last decade for both groups, the zero-income-tax-rate states outperform the highest-income-tax-rate states by a fairly sizable amount.
The zero-income-tax-rate states have far faster growth in tax revenues than did the states with highest income tax rate over this period.
If you look at the performance of the zero-income-tax-rate states and the highest-income-tax-rate states, I believe a large amount of their difference is due to taxes. Not only is it true of the last decade, but I took these numbers back 50 years. And, there's not one year in the last 50 where the zero-income-tax-rate states have not outperformed the highest-income-tax-rate states.
There are 11 states in the United States that in the last 50 years instituted an income tax. So I looked at each of those 11 states over the last 50 years, and I took their current economic metrics and their metrics for the five years before they put in the progressive income tax... Every single state that introduced a progressive income tax has declined as an overall share of the U.S. economy.
There are several states that move from Karl Marx-like policies to Adam Smith-like policies and back again in a weekend. So for the states with huge volatility in their income tax policies over time, the differences in growth rates in those periods are really amazingly consistent with tax rates really mattering.
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