Drew Johnson, Editor of the Free Press opinion page at the Chattanooga Times Free PressQuestion of the week: On the final day of the legislative session, Georgia state Rep. Tom Kirby, R-Loganville, introduced the “Fair Taxation Act of 2014.” The bill would eliminate the Georgia income tax and replace it with a higher sales tax. Do you think the plan would benefit the state and its economy?
State Rep. Tom Kirby’s plan to eliminate Georgia’s income tax would result a more robust economy, more successful companies, more jobs and more residents.
Nine states have no individual income taxes. (Two of those states, Tennessee and New Hampshire, do tax dividends and interest income, a policy Georgia should avoid since it encourages the wealthy to stay away.) According to a recent Forbes article, economic growth in those nine states “skyrocketed from 1998 to 2008 almost 50 percent faster than in the nine states with the highest top personal income tax rates. Job growth rocketed ahead more than twice as fast in the nine no-income-tax states as compared to the nine top income tax rate states.”
A 2012 study by Stephen Moore of the Wall Street Journal and famed economist Art Laffer points out that eliminating an income tax doesn’t mean less revenue for state government. In fact, it likely means more of the 11 states that adopted a state income tax in the last 50 years, nine of them experienced a decline in tax revenues. That’s because in income tax is so stifling to state economies.
All 11 states that passed an income tax in the last half-century grew more slowly than the rest of the country after adopting an income tax, and “per capita income relative to the U.S. average declined substantially after adoption of state income taxes in all 11 states,” according to Moore and Laffer.