There has been a lot of talking from our elected leaders about how to increase the state's revenue during the current budget debate, hopefully the our state senator and representatives will consider the economic of impact of any tax increase before they decide to support or oppose one.
Every increase in taxes also causes a decrease in private economic activity that is greater than the dollar amount of the tax increase.
By estimates that are accepted by many economists, for every one dollar increase taxes, there is an additional 60 cents to 1 dollar decrease in private economic activity due to the fact that taxes distort the economy.
For example, a $1 million tax increase would reduce private economic activity by $1.62 million, not just by the $1 million that the state would be taking out of the economy.
Hopefully, our state leaders will think long and hard about the full economic effects of any tax increase and make sure the benefit of any additional state spending that would be financed by an increase in taxes outweighs the losses that those taxes would cause to the state economy.
The taxpayers of the state would also be well served if the state government would undertake a full review of all state programs and agencies to see if they are cost effective and produce enough benefits to the taxpayers to equal or exceed there cost.
Robert MW Stanford