People vote with their feet. When one state does something stupid... people can leave that state and take their talent and money with them. In this week's syndicated column, I take a look at which states do it right (and gain people) and which ones strangle freedom.
This competition between states makes it possible for states to learn from each other's successes.
T.W. Shannon, speaker of the Oklahoma House of Representatives, told me that he's learned. His state, where the economy had long been sluggish, finally figured out they could spur growth with tax cuts.
"We are moving to reduce our state income tax rate... Every time we have done it in the past, we have seen increased revenues and growth." Shannon adds, "Capital won't flow to a hostile environment."
No, it won't.
You'd think politicians would figure that out. But they rarely do. Brown's income data shows that capital flows to friendly environments: "States like (Texas, without a state income tax) gained $146 billion, whereas the reverse, the states with the highest among personal income-tax rates, lost over $120 billion."
The owners of the basketball team the Houston Rockets give prospective players pamphlets that detail how many Rolex watches and Bentleys they could buy just from tax money they'd save if they move to Texas.
This data doesn't stop a prominent pundit in my state, The New York Times' Paul Krugman, from writing that the Texas economic miracle is "a myth" because Texas still has high poverty rates, a high high-school dropout rate and a low percentage of people with health insurance.
Behind this clash is the larger disagreement about how to handle the economy - promote growth by shrinking government or boost public services for the poor. The state-by-state contrast keeps getting sharper. Crudely put, blue states keep getting bluer, and red states keep getting redder. Krugman looks at Texas and sees policies - and Republican politicians - he doesn't like.
But people don't just vote at the ballot box or by their choice of newspaper subscriptions. They vote with their feet. And by that measure, the state that publishes Krugman's columns - New York - and the state where he's a college professor - New Jersey - are losing big-time.
The rest of my syndicated column here.