[Vision2020] Idaho Income Tax Cuts

[Ron Force]

Mike Moyle, House majority Leader, wants to cut top rates in personal and
business income tax.
http://www.spokesman.com/blogs/boise/2016/jan/26/moyle-tax-cut-bill-its-time-we-gave-back-little-bit/

Summary from :http://economistsview.typepad.com/economistsview/ :

''There is No Reason to Believe that Tax Cuts are an Elixir for Economic
Growth''
<http://economistsview.typepad.com/economistsview/2016/01/there-is-no-reason-to-believe-that-tax-cuts-are-an-elixir-for-economic-growth.html>

William Gale, Aaron Krupkin and Kim Rueben in the Milken Institute Review:

There is No Reason to Believe that Tax Cuts are an Elixir for Economic
Growth
<http://assets1c.milkeninstitute.org/assets/Publication/MIReview/PDF/05-12-MR68.pdf>:
Many folks, and from time to time, majorities in Congress, apparently
believe that the cure for what ails the economy is lower taxes – in
particular, lower tax rates for high-income earners. Now this enthusiasm
has spread to state governments that are led by conservatives, offering new
tests of a proposition that has generated scant evidence of success
elsewhere.

Failure of this idea at the federal level does not necessarily imply that
tax cuts would fail to increase output and jobs at the state level. For one
thing, lower taxes in one state might lure existing businesses (and jobs)
from other states, even if they yield no overall increase in employment or
output. But it’s also worth noting that the stakes are higher for the
states. Washington can finance shortfalls in revenue by selling bonds to
the public or by borrowing from the Federal Reserve – in effect, printing
money. States are far more constrained by the skepticism of the private
credit markets or constitutional prohibitions against deficit finance, or
both. Thus, any failure of supply-side economics to work its magic could
force punishing cuts in state programs. ...

At the core of supply-side economics is Arthur Laffer’s back-of-the napkin
curve illustrating the undeniable reality that, at some point, higher tax
rates will lead to lower revenues as well as fewer jobs and slower growth.
But this does not imply there are many realworld examples of tax rates so
high that cutting them would have much impact on jobs or growth. That has
been amply demonstrated at the national level, where tax cuts have eroded
revenue without discernible effect on economic activity.

The states have no good reasons to believe that tax cuts will bring the
desired manna. Yet some continue to erode their tax bases in the name of
business growth in an era in which few states can afford to cut critical
services (that businesses care about) ranging from education to
infrastructure repair. Some ideas live on and on, no matter how much
evidence accumulates against them. States that accept them as gospel anyway
do so at their peril.



Ron Force
Moscow Idaho USA
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