Last week, my colleague Lyman Stone wrote a post responding to a presentation by Nebraska’s Open Sky Policy Institute on taxes and growth. Their position is very nuanced; they say that “academic research on the effect of state taxes on state economic growth is inconclusive.” They’re careful to include this “state” distinction because studies on taxes with international data sets are pretty clear; they virtually always find that taxes harm growth.
One of the states that the presenter picked to illustrate her point was Illinois, which was odd to us, because Illinois looks to be a very good example of a state that is falling behind on growth as a direct result of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. increases. Lyman’s post is very convincing; you should read it.
Today, Open Sky sent out an email saying that we interpreted their message wrong:
We’d like to note that in a recent blog, The Tax Foundation used Dr. McGuire’s presentation out-of-context to incorrectly assert that Dr. McGuire claimed Illinois – thanks to its income tax increases – was an example for other states to follow.
During the presentation, Dr. McGuire – a professor at Northwestern University in Evanston, Ill. – did not laud Illinois for the tax increase, but rather discussed how the state chose to increase income taxes to generate revenue to shore up its finances.
So there you have it: Open Sky Policy Institute wants to be sure you know that Illinois is by no means an example that other states should follow on tax policy.
Be sure to check out our latest paper on Illinois’ proposed income tax hike.
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