Tax less, spend less, grow more jobs

Economic growth and job creation do not come from government spending:

States that Spend Less, Tax Less — and Grow More States
with an income tax spent 42% more per resident in 2011 than the nine states without an income tax.

Does curtailing spending lead to better private sector growth?

States that allow taxpayers and employers to keep more of their earnings are reaping the benefits. States without an income tax have significantly better growth in private sector GDP (59% versus 42%) over the last 10 years. They increased the number of jobs by 4.9% while jobs in the rest of the states declined by 2.6%. States without an income tax gained population (+5.5%) from domestic migration (U.S. residents moving in and out of states) while all other states as a whole lost 1.3% of population between 2000 and 2009.

The 10 states with the highest rank in the State Business Tax Climate Index also dramatically outperform the rest of the country. They win handily on private-sector GDP growth (61% versus 42%), gained 6.1% private jobs while other states declined by 2.8%, and gained 5.5% from domestic migration at the expense of other states, which lost 1.2% between 2000 and 2009.

As a result, the states with the better business tax environment will continue to outperform the rest of the country.

Cross-posted at Fausta’s blog.