NCPA - National Center for Policy Analysis

Cato Report Card On State Tax Cuts

February 12, 2001

Many states have been on a supply-side tax-cutting binge, and are proving that tax cuts can be a highly effective economic stimulant, say Cato Institute analysts. Last year was the sixth straight year that the states, in aggregate, cut taxes.

According to the latest Cato biennial Fiscal Report Card of the Governors:

  • Over the course of the 1990s, 26 governors approved cuts in state income tax rates and 14 more slashed corporate tax rates.
  • Over the past decade, the 10 states that cut taxes the most created about twice as many new jobs and enjoyed about 27 percent more income growth than the 10 states that raised taxes the most.

For instance, over the last nine years, Michigan Gov. John Engler has signed tax cuts totaling $20 billion, and ranks third among the states in job growth. Those governors who have cut taxes and restrained state spending the most received the highest grades, while the worst grades were received by tax-and-spending increasers.

  • Gov. Paul Cellucci (R-Mass.) and Kenny Guinn (R-Nev.) are the two champion tax-cutting governors, receiving "A" grades.
  • The three most fiscally reckless governors are John Kitzhaber (D-Ore.), Gray Davis (D-Calif.) and Tom Vilsack (D-Iowa), who received a grade of "F."

Source: Stephen Moore and Stephen Slivinski (both Cato Institute), "Do Tax Cuts Work? Just Look at the States," Wall Street Journal, February 12, 2001.

For Cato study text

For WSJ text


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