2016 Green Book
U.S. Supreme Court Justice Louis Brandels saw states as “laboratories of democracy” conducting “experiments” in public policy. Today, more than eight decades after Brandels coined the phrase, state experimentation with tax policy makes it abundantly clear that tax policy has a direct impact on economic growth. Each of the eleven states that enacted an income tax since 1960 now has a smaller share of state GDP relative to the other 39 states and each one also has a smaller share of state and local tax revenue. To the contrary states with low tax burdens and state without an income tax consistently outshine their higher-burden peers on the key, tangible economic measures like private sector job, GDP, and wage growth. Citizens are noticing, and “voting with their feet” by flocking to low-burden states from higher-burden counterparts.