Open Letter: Errors on Peter Fisher’s Grading the States Website

January 26, 2016

Professor Peter Fisher

Dear Dr. Fisher,

I want to alert you to errors on your Grading the States website with respect to our State Business Tax Climate Index.

Regarding the page “The SBTCI Bears No Relation to Actual Taxes on Business,” your headline should be revised to make clearer that our report focuses on tax structures while the COST/E&Y report focuses on tax burdens. I’m sure even you would concede that one state’s poorly structured taxes and another state’s well-structured taxes can produce the same tax burden, so it would be odd if our reports which measure two different things came to the same conclusion. You obviously think it should, so I would suggest “The SBTCI’s Measure of Tax Structure Does Not Match Others’ Measure of Tax Burdens,” which is a non-misleading way of describing your point.

Regarding the page “The SBTCI is a Poor Measure of Growth Potential,” I appreciate the reference to the studies that support our Index but you really should include footnotes and links to them. It appears very one-sided that you only link to studies that support your conclusion. Your first-paragraph assertion that we believe “a company’s cost of doing business” is the thing we believe “matters most” should also be corrected, since you have us assert the opposite of what we believe – how a tax is structured and imposed is often more important than the dollar amount collected.

Regarding the page “What “Tax Neutrality” Means and Why Businesses Don’t Care,” the whole page is just dripping with bitterness and you ought to consider deleting it. I’ll simply state that many people, including businesses, support the idea that the tax system should focus on raising revenue rather than picking winners and losers in the economy. I’ve on many occasions praised the tax incentive work of the Pew Center on the States and Good Jobs First, who along with Tax Foundation and other groups are finding ways to make tax neutrality a real thing at the state level. These legislative actions have had the support of the business community, not opposition as you assert. If anything, it is groups like CBPP (who apparently paid for your website?) that resist neutrality by demanding special taxes on low-income cigarette smokers, Internet access, out-of-state businesses, and others.

Regarding the page “The Tax Foundation Fails to Defend its Methodology,” we spend several pages of our report (pp. 8-15) responding to criticisms. We even updated our response this year to reflect your most recent study criticizing our Index, even though you just recycled old material from your past reports. You obviously do not believe our response to you is sufficient, but we still responded. Saying we didn’t is disingenuous. I might suggest “Tax Foundation Responses to My Criticisms Don’t Convince Me,” since that’s what you really mean, and adding a link to pp. 8-15 of our report. I’d also note that my name is Joseph, not David, and that should be corrected.

Regarding the page, “What Others Have Written about the Tax Foundation’s Rankings,” I would suggest deleting all the quotations from CBPP-affiliated groups (which is nearly all of the references). These are groups not only ideologically predisposed to agree with you, they also receive operating funds from CBPP so they’re on a tight leash to attack us and be easy on CBPP. If you are actually interested in presenting balanced facts, I’d ask you to post the many favorable references to our work that we’ve gotten from journalists, businesses, and from all sides of the political spectrum.

On your main overview page, I’d also note that we were founded in 1937, not 1936. Our mission is to promote good tax policy for all taxpayers.

I believe you’re located in Iowa City, and I’ll be there sometime in February. If you are interested in having a sincere exchange of views over lunch rather than hiding behind misleading websites, I’ll treat.


Joseph Henchman
Tax Foundation

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