The Low-Tax Myth

The Republicans have a lot of myths about taxes and economics. They like to say that raising taxes hurts job creation. That myth has been exposed by numerous studies. The truth is that taxes, whether low or high, have nothing to do with job creation. Jobs are created when demand for products/services grow, and businesses must hire workers to meet that demand. No business person will ever hire an unneeded worker, no matter how low taxes are, because hiring unneeded workers cuts into profits unnecessarily.

Other "low-tax myths" being perpetrated by the GOP is that businesses do better in low-tax states, income grows more in low-tax states, and unemployment is lower in low tax states. None of these are true either. The Institute on Taxation and Economic Policy has issued a new report that exposes these Republican lies.

As the charts above show, businesses actually show more growth in both the 9 highest tax states and the states that all have an income tax than they do in the low-tax states (the states with no income tax). In addition, median income is higher in the states that do have an income tax and the 9 "high-tax" states than it is in the "low-tax" states. And unemployment is no better in the "low-tax" states than the other states. Here are some things the report found:

– Four of the nine states without income taxes are actually doing worse than the average state in regards to economic growth per capita: Texas, Tennessee, Florida, and Nevada.

– Five of the nine states without income taxes are doing worse than average in terms of median income growth: New Hampshire, Florida, Tennessee, Alaska, and Nevada.

– Six of the nine states without income taxes had higher than average annual unemployment rates over the last decade: Texas, Florida, Tennessee, Washington, Alaska, and Nevada.

In other words, taxes don't have anymore to do with business growth, median income, or unemployment, than it does with job creation. All of these things are enhanced when demand is high and hurt when demand is low. And they could all be helped by pumping more money into the economy. The economy (and businesses) would be helped a lot more by raising the minimum wage and rebuilding our infrastructure than by lowering taxes (or eliminating state income taxes).

The Republican one-trick pony of lower taxes is nothing more than an old and lame horse. Lower taxes are not a magic pill to boost the economy. They are nothing more than Republican lies -- told to get corporate moguls a tax break they neither need nor deserve.