State income taxes are big news these days. First, we published of our study on Governor Richardson’s successful income tax cuts. Today, the Wall Street Journal had an excellent piece by Art Laffer which shows how personal incomes slow economic growth in those states that have adopted them.
As Laffer writes:
Each and every state that introduced an income tax saw its share of total U.S. output decline. Some of the states, like Michigan, Pennsylvania and Ohio, have become fiscal basket cases. Even West Virginia, which was poor to begin with, got relatively poorer after adopting a state income tax.
Richardson’s cuts, as we’ve shown, stimulated growth. Our next Governor should seriously consider eliminating New Mexico’s personal income tax, especially once the economic outlook brightens and needed cuts and reforms are made that will further increase the efficiency and cost-effectiveness of New Mexico government.