WRAL offers a very instructive article today (emphasis added):
SPRINGFIELD, Ill. ? While many states consider boosting their economies with tax cuts, Illinois officials are betting on the opposite tactic: dramatically raising taxes to resolve a budget crisis that threatened to cripple state government.
Neighboring states gleefully plotted Wednesday to take advantage of what they consider a major economic blunder and lure business away from Illinois.
“It’s like living next door to ‘The Simpsons’ ? you know, the dysfunctional family down the block,” Indiana Gov. Mitch Daniels said in an interview on Chicago’s WLS-AM.
But economic experts scoffed at images of highways packed with moving vans as businesses leave Illinois. … “The idea of competing on state tax rates is . . . hopelessly out of date,” said Ed Morrison, economic policy advisor at the Purdue Center for Regional Development. “It demonstrates that political leadership is really out of step with what the global competitive realities are.”
Is it now? Go check out Rich States Poor States: ALEC-Laffer State Economic Competitiveness Index by Arthur B. Laffer, Stephen Moore and Jonathan Williams. Of the 50 states, Illinois has the 48th worst economic performance rank, and its economic outlook ranking is just as bad (47th). Furthermore, Illinois’ absolute domestic (that is, among U.S. states) migration from 1998-2008 is -637,979, and the state has been losing 60,000 to 80,000 residents per year. It’s what the authors call “voting with their feet“:
Why on earth would a state with the natural and cultural amenities of California be losing people (over 1.3 million from 1997 to 2006) in comparison with, say, Nevada (plus a half million in that time)? Because California has the highest “progressive” income tax rate in the nation outside of New York City, and the costs for businesses to comply with California’s byzantine menu of regulations is over twice as high as those of other Western states. As Laffer and Moore write, “It takes a lot of public policy folly to persuade people to pack their bags and abandon California’s sunshine, 70-degree weather, scenic mountains, and beaches, but lately the politicians in Sacramento have proved themselves up to the task.”
You know, if I were a resident of Illinois’ neighboring states whose politicians demonstrate knowledge (to the point of “gleeful” excitement!) that low taxes and regulation bring in people and jobs, and then don’t observe those politicians doing their best to lower taxes and regulations, I’d be outraged, wouldn’t you? Why wait for other states to become more dysfunctional than yours?
