The Locker Room

Tax competition between states

Posted by George Leef at 09:03 AM

It's driving people and firms out of high tax states and luring them into low tax states -- so report Arthur Laffer and Stephen Moore in today's Wall Street Journal. You can read their piece here.

"Migration patterns ... reveal which states have the most dynamic and desirable economies and which are 'has-been' states....The biggest losers are almost all congregated in the Northeast and Midwest. Liberals contend that tax rates, regulations, forced union laws and runaway government spending don't matter when it comes to creating jobs, high incomes and a higher quality of life. People tell us otherwise by voting with their feet."

Imagine how much more pronounced this movement would be if the nation hadn't largely abandoned federalism going back to the New Deal. Washington's insistence on national mandates for all sorts of policies that under the Constitution belonged within the realm of state policy-making greatly reduced the leeway for states to follow their own paths. The competition between states could and would be much more vigorous if it weren't for dozens of federal statutes such as Social Security, the National Labor Relations Act, the Fair Labor Standards Act, the Americans With Disabilities Act, the Community Reinvestment Act that impose national mandates where the states should have been free to have any policy (including no policy) they wanted.

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