You don’t elect politicians to allow them to take your money and use it on their priorities. You elect politicians to efficiently achieve the goals of constituents with as little taxation as possible. Some states get it, some don’t. At National Review, Chris Edwards gives you an update on how states did in 2024’s legislative season in regard to taxation. He writes:
Republican-led states have focused on cutting individual- and corporate-income taxes, which is the best way to spur investment and job creation. According to the upcoming Cato Institute Governors’ Report Card, between 2021 and 2024, 14 states cut their corporate-tax rates and 21 states reduced their top individual-income-tax rates.
Some of the largest income-tax cuts were in Arizona, Arkansas, Georgia, Idaho, Iowa, Mississippi, Montana, Nebraska, Oklahoma, South Carolina, and West Virginia. Republican governor Kim Reynolds slashed Iowa’s corporate-tax rate from 9.8 percent to 5.5 percent, and she chopped the individual-income tax from a nine-bracket system with a top rate of 8.98 percent to a simple, 3.8 percent flat tax.
Some state leaders are talking about phasing out income taxes entirely. That may sound radical, but a diverse group of nine states — including Florida, New Hampshire, South Dakota, and Tennessee — prosper without individual-income taxes. Sales taxes are a simpler and more efficient way to fund state governments than income taxes.
Unfortunately, cutting rates is not the only tax-policy change sweeping the country. State tax systems are increasingly infested with narrow breaks or subsidies as politicians intervene to aid supposedly trendy industries, such as “green” energy, semiconductors, film production, and artificial-intelligence-server farms.
New York has a tax credit for digital-gaming businesses, Virginia has a tax credit for vineyards, California has a tax credit for cannabis businesses, and Georgia hands out $1 billion a year in tax credits for the film industry. These breaks — often called “incentives” — complicate tax codes, distort the economy, and are ultimately unfair to businesses that pay the full tax load.
The Council for Community and Economic Research estimates that there are over 2,400 state business-incentive programs, roughly half of which are tax breaks and the others are spending subsidies. The number of such programs has more than doubled since 2000. For example, Virginia has 92 business-incentive programs, and half of them have been added since 2010.
This type of cronyism in state tax codes is worsening, but the federal government deserves some blame. When Congress passes special-interest breaks, the states enact copycat versions. For example, more than half the states have enacted versions of the federal low-income housing credit, which is a complex and wasteful handout to housing developers that causes problems.
Action Line: Is your state one where politicians put your needs ahead of their own political agendas? If you’re looking to move to a better America, start your search with Your Survival Guy’s 2024 Super States. Click here to subscribe to my free monthly Survive & Thrive letter.
