Rex Sinquefield at Forbes.com talks about why the critics of Kansas’ implementation of supply-side economics have egg on their face after the 2014 election.
Justin McFarland, Kansas Director of Labor Market Information, rightfully proclaimed that the employment gain “continues to lead Kansas’ comeback from the Great Recession” and that the “increased income will continue to drive growth.”
This is good news for working families and their employers. Not so much for Brownback’s well-funded opponents, including the National Education Association and the American Federation of Teachers, which spent $60 million to defeat fiscal conservatives in the mid-term elections.
Powerful adversaries of Brownback’s pro-growth tax policies painted a dire “sky is falling” picture of the countless misfortunes that were sure to destroy the state’s economic future. While they may want to say and believe as they wish, the proof is in the numbers.
And while data is critical to the political process of creating good state fiscal policy, the most important figure is the 2.9 million people who live in Kansas whose lives are impacted by these policies. Kansans elect the people who are tasked with solving problems, and as the facts emerge, it appears that they have chosen wisely. The quantitative, 50-state data that is thoroughly documented in An Inquiry into the Nature and Causes of the Wealth of States (which I co-authored with Stephen Moore, Art Laffer, and Travis H. Brown) shows that every measure of economic prosperity is linked to taxation. Those states that limit or eliminate distortionary taxes, the worst of which are those placed on personal and business income, are able to expand their local economies.
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And this, from Allister Heath in London’s Telegraph on the upcoming Autumn Statement by George Osborne:
Changing tax rates also has an effect on incentives to work, invest, consume and transact which need to be taken into effect when setting policy and budgeting
So, given that there won’t be that much actual action, and only miniscule tweaks to the aggregate sums raised and spent, what we need to see instead is evidence of fresh philosophical and economic thinking from the Chancellor. We need him to embrace much more comprehensively supply-side economics and to paint a positive vision of an economy and society that are no longer weighed down by an oppressively large and unaffordable government sector.
In particular, the Chancellor needs to make it clear that he believes that lowering taxes on work would produce more of it, that cuts to the tax on the returns on capital would bolster corporate expenditure, productivity, jobs and growth, and that a smaller state is inherently a good thing, in terms of both improving the economy’s performance and by increasing the autonomy of individuals and families.