Jonathan Williams, Chief Economist, Director of Tax and Fiscal Policy Task Force, American Legislative Exchange Council
Williams is the co-author of "Rich States, Poor States" along with Arthur Laffer and Stephen Moore, published by ALEC.
Williams is outlining tax principles that he says should be the basis for any state's tax system. He says states should have broad-taxable bases and low rates, and that a state tax system should be simple. The cost of compliance for businesses and taxpayers is a dead-weight loss to a state's economy.
Williams believes in tax neutrality, in that the tax code should not pick winners and losers. That should be left to the market. Everyone plays by the same rules. The final core principle is transparency. Everyone should know how and why they are taxed.
"Businesses don't pay taxes; people do." While businesses fill out tax forms, all taxes are ultimately paid by business owners, workers, or consumers. Williams says the ultimate tax burden lands most heavily on workers.
Williams says New Hampshire ranks 36th out of 50 in tax competitiveness, largely because of high business taxes, the highest property taxes in the nation, and new tax increases along with high state debt.
"All taxes matter a whole lot, but some matter more than others. Income taxes matter a whole lot for economic growth." Williams compares the nine states with no income tax with the nine states with the highest income tax. He says the no-income tax states have 32% higher income growth than the state's with the highest income taxes, and much larger net migration than the high tax states.
Williams summarizes "Rich States, Poor States" by saying, "No state has ever taxed its way into prosperity." He points to Maine and New Jersey, which enacted income taxes to solve their budget problems, but today face the same fiscal challenges as New Hampshire.