While the White House and congressional Democrats are feverishly trying to enact massive, economy-killing tax increases, numerous states are going in the opposite direction by cutting them. These local officials recognize that reducing the tax burden on their citizens will give them more prosperity and the higher revenues that come with better times. Arizona, Ohio, Wisconsin, Oklahoma, Nebraska, Iowa, Montana, Louisiana, Idaho and New Hampshire have all passed reductions in state income taxes.
Ohio has engineered the biggest tax reduction in the Buckeye State’s history, eliminating its two tax brackets over 4%. The first $25,000 of an individual’s income is now tax-exempt. Compare that with California, where one hits the 4% bracket at that income level. Ohio’s law also ensures that people who work from home don’t have to pay taxes to cities where they no longer work.
Particularly impressive is what Arizona’s governor, Doug Ducey, managed against fierce Democratic opposition and some Republican reluctance. After much wrangling with the state legislature, the governor achieved a flat tax rate of 2.5% on incomes up to $250,000 and a rate of 4.5% on those above.
New Hampshire has always been known for having no state income tax (and no sales tax), but it did have a 5% levy on dividends and interest income. That tax will now be eliminated.
It’s not just Republican governors who have been signing reductions. Such was the popularity of giving taxpayers real relief that Wisconsin enacted the largest tax cut in its history even though its governor, a Democrat, wanted to boost levies. Louisiana’s governor, a Democrat, also signed on to tax cuts.
But not all states are helping their taxpayers. It’s no surprise, for example, that chronically misgoverned New York raised taxes, even though it fared better than expected in revenue and has billions more in aid coming from Washington. California, flush with $100 billion in extra cash, refuses to reduce its sky-high tax rates.
Low-tax states—and countries—routinely do better than high-tax ones.