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Tax
April 1997
Flat Income Tax States Fare Much Better	States which have a flatter, simpler income tax system -- or perhaps no income tax at all -- are far outpacing other states in personal income, economic growth and job creation, according to economists J. Kenneth Blackwell and Richard Vetter. Personal income per capita rose more than 40 percent faster in Texas and Florida during the last business cycle through the third quarter of 1996 than it did in California. It grew 20 percent more in South Dakota than in North Dakota. As of January, Massachusetts' unemployment rate was nearly one-fifth lower than Rhode Island's, and Indiana's 3 percent rate was much lower than Ohio's 5 percent. The poorer performing states all have highly progressive income tax levies. Not surprisingly, people move from high-tax to flat-rate states. From 1990 to 1995, the nation's 16 flat-rate income tax states had net immigration of native-born Americans of 1,181,000 -- about 1,000 each business day. All of them were fleeing from progressive income tax states. The experience of the states suggests to the researchers that moving to a saner, fairer, growth-oriented tax system would significantly boost American real output from its current long-run rate -- a historically low 2.5 percent a year. It would also remove millions from the tax rolls while making all those remaining play by the same -- simple -- rules. Source: J. Kenneth Blackwell (Treasurer of the state of Ohio) and Richard Vetter (Ohio University), Investor's Business Daily, April 11, 1997.