Study: State Tax Cuts Don't Spur Economic Growth
A new study from the Center on Budget and Policy Priorities (CBPP) shows states that cut tax rates do worse in terms of economic growth than other states. Numerous Republican governors have pushed for tax cuts under the premise that lower tax rates lead to greater economic growth, but the CBPP study concludes that this premise is wrong.
The five states that implemented deep tax cuts during the 1990s experienced slower job growth over the next economic cycle than states that did not, and none of those states experienced income growth that exceeded inflation, CBPP found.
The five states that cut taxes the most in the mid- and late-1990s saw job growth of less than 0.3% from 2000-2007, while the remaining states averaged 1.0% growth. Similarly, the states with the biggest tax cuts saw slower income growth than the other states, on average.
At least seven Republican-led states are currently pursuing massive tax cuts.


