Our tax system is foundational to our ability to make basic investments in our economy — reliable infrastructure, good schools, affordable housing, and quality health care for all. Taxes make it possible to address immediate needs and pay forward today’s successes for future generations. To craft policy solutions that serve everyone, we must focus on […]
Our tax system is foundational to our ability to make basic investments in our economy — reliable infrastructure, good schools, affordable housing, and quality health care for all. Taxes make it possible to address immediate needs and pay forward today’s successes for future generations.
To craft policy solutions that serve everyone, we must focus on evidence and indicators that illuminate the policy debate. And we must ignore shallow analysis that obscures more than it reveals, such as the Wallet Hub ranking on state taxes published recently in Mainebiz (“Maine’s tax burden is one of the highest, new study says,” published March 31).
These eye-catching rankings feed into the notion that cutting taxes is a surefire way to improve our economy. That is simply false.
The relationship between taxes and economic growth has been overstated for years. It is a myth used by wealthy individuals and corporations, who stand to gain most in the short term from lopsided tax cuts. If the goal is economic growth and broadly shared prosperity, lowering taxes for the wealthy and corporations is a failed approach. States that cut taxes during the last recession recovered slower than those that prioritized continued investment.
These tax burden rankings are extremely blunt instruments. They ignore meaningful distinctions between states. For example, states without income taxes have lower overall tax burden rankings but tend to rely more heavily on regressive taxes such as the sales tax, resulting in some of the highest tax burdens for low-income and working-class households. Similarly, property taxes may be higher in certain communities to boost investments in schools and local services, which strengthen local economies.
Tax rankings such as these — without a deeper look under the hood of what’s happening in state economies — are a disservice to our public policy debate.
— Garrett Martin, executive director at the Maine Center for Economic Policy, a nonpartisan, nonprofit research and policy organization dedicated to improving the economic well-being of low- and middle-income Mainers
