The Leaflet: States Must Cut Income Taxes for More Economic Growth

Published July 11, 2014

States Must Cut Income Taxes for More Economic Growth 

A recent study by the Rockefeller Institute of Government reported state personal income tax collections for the first quarter of 2014 declined by 7.1 percent compared to the first quarter of 2013 for 38 early- reporting states. Of 38 states that enforce broad-based personal income taxes, 33 reported declines, with 10 states recording decreases of more than 10 percent.

In the 2013 state legislative sessions, eight states lowered some aspect of their income tax rates. Several other states are considering similar changes this year.

In a Research & Commentary, Heartland Institute Senior Policy Analyst Matthew Glans concludes, “A state’s tax policy should focus on bringing in enough revenue to cover the costs of necessary functions of government in the least economically distorting way possible.” Studies have shown states with no income tax or with income tax rates lower than the national average perform better economically and achieve greater job and population growth than those with higher income taxes. Research from the Tax Foundation shows income tax cuts have caused increased economic development and tax revenue for the government.

On August 22nd and 23rd, The Heartland Institute will be hosting our Emerging Issues Forum in Minneapolis. During the Forum, attendees will hear from leading free-market experts as we explore solutions to the top public policy issues that will face the states in 2015 and beyond, including panels on various budget and tax issues. Admission to the event is free for elected officials and staff. Reserve your place at this event by going to our website,, or by contacting Alex Monahan, Heartland’s government relations coordinator, at 312/377-4000 or[email protected].  

Budget & Tax
Research & Commentary: Alabama Pension Reform
Unfunded state pension liabilities are an increasingly troubling problem for states across the country. This has been especially true for Alabama. In this Heartland Institute Research & Commentary, Senior Policy Analyst Matthew Glans concludes, “In 2010, Alabama received a grade of D in The Heartland Institute’s 50-State Pension Report Card. According to the Huntsville Times, Alabama’s three pension funds, including separate funds for education workers, judges, and state and local government workers, currently have only $28.1 billion in total assets but $42.5 billion in total liabilities. These three programs serve 114,050 retires and 221,735 current workers.”Read More

Energy & Environment
Obama’s CO2 Restrictions Will Hit Hardest in Key Senate States
In this Environment & Climate News article, Heartland Senior Fellow James M. Taylor discusses the impact of the Obama administration’s proposed CO2 restrictions on key Senate states. He explains, “In Senate battleground states, the Obama administration’s emissions reduction requirements are particularly stringent. Arkansas, Colorado, Georgia, Louisiana, Michigan, Minnesota, New Hampshire, North Carolina, and Virginia will all have to reduce their emissions by more than the 30 percent overall national reduction.”  Under these restrictions, many states will be forced to shut down perfectly good coal-fired power plants to meet their emissions requirements. Read More

The Premium Spikes Begin
This fall, hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice: accept higher premiums to stay on their current plan, or save money by switching. According to Heartland Institute Senior Fellow Benjamin Domenech, writing in the Heartlanderdigital magazine, that is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5 percent and 22.8 percent for the next year. Read More

Research & Commentary: Common Core in Pennsylvania
Pennsylvania is one of 45 states that adopted national Common Core State Standards. In this Research & Commentary, The Heartland Institute’s government relations intern, Hailey Vrdolyak, concludes, “Despite the name change, the standards in Pennsylvania are the Common Core standards, which have questionable academic quality, were created and adopted in a nontransparent way, raise significant student privacy concerns, and would further erode state and local control of schools.” Several states, including Oklahoma and South Carolina, have repealed Common Core, and many others, including Louisiana, Missouri, and North Carolina, are in the process of taking similar steps. Read More

The FCC Plan to Steamroll State Laws Against Government Broadband
In an article in the Heartlander digital magazine, Heartland Policy Advisor Seton Motley discusses why government broadband is a disaster and why states should be worried about executive action on the part of the Federal Communications Commission moving forward. Read More

From Our Free-Market Friends
2014 Tennessee Pork Report
The Beacon Center of Tennessee has published its ninth annualTennessee Pork Report, exposing $609 million in state and local government waste. The $609 million is the most government waste uncovered in a single year since the Beacon Center started publishing the report. Beacon CEO Justin Owen concludes, “It’s time for Tennesseans to start holding their elected officials accountable for the rampant misuse of their hard-earned money.” Read More




Two years ago, when Rhode Island passed bipartisan legislation to reform a state pension system that threatened to bankrupt the state, it was hailed as an example for other states to follow. Now, as the June issue of Budget & Tax Newsreports, Rhode Island is once again an example for other states: But this time around, it’s an example of what not to do.

School Reform News

Environment & Climate News