Recently, the US Chamber of Commerce (Chamber) ranked Tennessee No. 1 among our 50 states for its low taxes and limited regulatory environment, and recommended Tennessee as a role model for the nation.
The Chamber, Tea Party, GOP, Grover Norquist, Mitt Romney and Newt Gingrich tell us that low taxes and limited regulation will solve America's economic problems, including giving us a balanced budget. Indeed, the Republicans are making a major push to eliminate or reduce state income taxes across the US. Norquist (and others) claim that government programs are a waste, no job is ever created by government, and so on. Tennessee, under their theory, should be a low tax/limited government utopia.
Instead, Tennessee's results imply -- 'you only get what you pay for.' Let's benchmark Tennessee's performance against the rest of the US.
Proponents of the 'low tax/limited regulation strategy' tell us it's not just about money, but also about quality of life. So let's see how Tennessee does on some basic metrics for Health, Personal Safety, and Education:
At an overall level among American states, Tennessee was ranked 44th -- where 50th is worst-performing -- by the American Human Development Index (Index). The Index was developed:
'as an alternative to simple money metrics. It is an easy-to-understand numerical measure made up of what most people believe are the very basic ingredients of human well-being: health, education, and income.' Source: The American Human Development Project, 2012.
Correlation is not causality. But it appears that Tennessee residents receive fewer and lower quality services from their government and private sector -- because they spend less money on their government and have a limited regulatory environment.
Oliver Wendell Holmes, Jr remarked, 'Taxes are the price we pay for a civilized society,' and the word 'price' is worth emphasizing. We are a free society and can choose how much government we want to buy, and how much regulation we're willing to accept.
My point isn't that the people of Tennessee have made bad choices, or that other states have made better choices. But when a politician tells you s/he can cut your taxes and reduce regulations -- without increasing the budget deficit, and/or reducing the quantity (or quality) of services -- that politician is likely a liar.
Americans pay ~$2,200/person per year in state taxes; Tennessee residents pay ~$1,700/year.
I welcome your comments!
About the Author: Steven Strauss was founding Managing Director of the Center for Economic Transformation at the New York City Economic Development Corporation (NYCEDC). He is an Advanced Leadership Fellow at Harvard University for 2011-2012. He has a Ph.D. in Management from Yale University and over 20 years private sector work experience. You can follow him on twitter at: @Steven_Strauss.
Appendix with Sources
Economic:
Health
Personal Safety
Education
Follow Steven Strauss on Twitter: www.twitter.com/steven_strauss
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Both parties.
It goes with the job description.
IMHO.
However, the Repugs who push a low tax and limited regulation "utopia" are among the cruelest of liars.
They know it will make things worse for the vast majority of ordinary Americans yet they just don't care.
As long as the upper classes are taken care they have done their jobs.
The vast majority of Americans are thrown to the financial wolves with not a speck of conscience or empathy.
It sites some peer reviewed academic research on the political power of the affluent in America.
Best s
Tax rates were higher and they had strict regulations in place.
America did well and the vast majority of Americans lived well.
It was....WAS the golden age of the American middle and working classes.
The 1980's....onward.
Approx. 30 years or so.
Fast forward to today after a 2008 economic meltdown and aftermath AFTER 30 years of lowering income tax rates and deregulation.
30 or so years of lowering income tax rates and deregulation.....DESPITE increased outsourcing costing American jobs and capability to pay (obviously needed to run the country) income taxes.....AND long term war(s).
Now tell me what is better for the vast majority of Americans AND America.....the golden age from around 1940 to 1980 of higher income tax rates and strict regulation OR what is happening today?
I rest my case.
Marginal income tax rates have been declining since WW II, and GDP growth rates have also declined. This post http://www.huffingtonpost.com/steven-strauss/tax-cuts-economic-growth-_b_1031376.html has a table setting out the marginal tax rates and related growth rates. I hope you find it of interest.
Tax cuts in the 1920's 1961, 1981 and 2004 sparked BOOMING economies and INCREASED federal tax revenue....... everytime!!
According to the IRS the 2004 Bush tax cuts resulted in a $785 billion dollar increase in federal tax revenue by 2007, the largest increase in federal tax revenue in just four years in US HISTORY...................HMMMMMMMMMMMMM.
They can NOT see what happens shortly after (somebody else has to clean up the financial mess if they can).
How many recessions did we have between 1981 and 2007??
Even if revenue increased (which I would like to see proof)....MORE money was spent....A LOT MORE.
Remember, it is NOT just what you earn but what you spend too.
And Bush went crazy spending like a drunken sailor AFTER passing tax rate cuts.
I ran two businesses at one time and you do NOT cut income (or let it remain the same) AND heavily increase expenses when you are already skating on thin financial ice.
Try COSTOFWAR.COM which has a running tally of the cost of the Iraq war since March 2003. Last I looked it the cost of the Iraq war for the past NINE years was $790 billion. The Bush tax cuts raised $785 billion in just four years.
The last Budget written by a Republican COngress and signed by Bush was FY 2007 which had a deficit of $163 billion. The next year Pelosi and Company wrote the FY 2008 Budget which TRIPLED the deficit to over $450 billion. From then on Obama and Pelosi could not even bother with a budget and have had deficits of over 1.2 to 1.5 TRILLION every year. The CBO just announced the 2012 SPENDING deficit (STILL NO BUDGET) will again exceed 1 Trillion for the fourth year in a row.
Obama has spent more and increased the deficit more in three years than Bush did in all eight years. In 2008 Obama called Bush's spending "irresponsible" and unpatriotic" yet he has spent trillions more than Bush in just three years with NOTHING to show for it.
They don't mention ANY of this on MSNBC?
I guess reality trumps ratings and polls. People want to live where there is less regulation and more freedom.
It turns out all those GOP voters don't like what they're getting. There's major push-back on some of his cuts, and rebellion in the legislature from the GOP legislators.
People think they don't want to pay taxes, but they don't know what they've got till it's gone. After it's gone, they find out they don't like it one bit.
The median household income means absolutely nothing without also knowing the cost of living in the state compared to other states. My income dropped significantly when I moved from California to South Carolina, but my lifestyle ratcheted up about 100 notches. What is the cost of housing in Tennessee relative to the cost of housing in California? How about food, gas and clothing?
Poverty, education and longevity are all cultural factors. If you have a high percentage of any historically disadvantaged population in your state, those numbers are going to be lower than, say, Massachusetts or Wisconsin.
One of the other results of any larger than normal percentage of disadvantaged persons is that a much larger percentage of the state budget is spent servicing their needs than, say, ploughing money into higher education or infrastructure courtesy of federal mandates.
It is difficult to make an objective decision about the quality of life in a state unless you know the facts behind the statistics.
Also it states the national unemployment rate is 7.7% in dec. 2011. It far higher then that, about 8.5%
This is exactly what is happening in Wisconsin right now. This is the Scott Walker T-bagger mantra. Services are reduced because of less funds and the laws he and the Fitz bros have rammed thru the legislature. If this is allowed to continue, we will end up a lot like Tennessee.
But there are folks applauding these actions. So to say that some would not blindly accept reduced services, is not correct. There are many that don't value the services that the government supplies, whether they benefit from it or not.
Everything I have I owe to the U.S. government for not letting my family rob me of opportunity as so many families do for so many girl children the world over.
They wouldn't even have taught me to read given a choice in the matter. But Uncle Sam didn't give them a choice in the matter.
They wouldn't send me to college. But Uncle Sam gave me a full ride scholarship ( national merit scholar, 1575/1600 Sat, etc ).
At the college that GOVERNMENT sent me to I met the love if my life.
Thanks Government!!!!
Using the education that GOVERNMENT gave me, I started a successful business.
Thanks Government!!!
My birth family ignored me. The church tried to quash me. But Government raised me up and taught me how to fly.
Taxes are so much better than charity because charities are run by biggotted jerks who pick and choose who to help and try to use their power over the people who need help to bully them into conformance with various ideologies and religions. In return for their help they demand your soul. Now that is an assault on freedom!
Government just helps.
Happy with that?
After all, taxes are better than charity, and government just helps.
I personally believe that the military needs to be cut significantly and that doing so is possible while still keeping the most powerful and capable military in the world, by far. We currently spend more than the next fifteen nations combined. That's absurd.
I also believe spending on the drug war needs to be eliminated and that funding put into drug awareness and rehabilitation where it will be more cost effective.
I believe the areas that need increased spending are education and research primarily. We must have the most qualified and smartest populace in the world and thus have the highest paid workforce in the world. And we must be the most technologically advanced nation, always.
These are general principles shared by many, including politicians. Many won't be so bold in their desires, but I believe that my very general guidelines above will lead to a better America. One that we were heading towards 50 years ago, but to which we've lost our way, primarily due to the Republican mantra of trickle-down and deregulation.
And while President Obama doesn't always act perfectly with what I'd like, he has us on the proper path.
In fact, we have a shortage of high end technical workers overall in the nation as blue states can't keep up with demand for them.
This is why, for example, apple built its new plants overseas. It can't find enough qualified engineers at home.
Pursuing utopia is what Marxists like Barack Obama do. Any leftist politician that tells you he can create utopia by taxing, spending and creating bigger government is probably lying. No amount of government spending or any kind of a safety net will ever eliminate poverty. All big government does is create additional problems that require even bigger government to solve.
That won't stop utopians from trying, though. We'll get one failed liberal policy after another. The same ones that destroyed housing, made a college education unaffordable, driven healthcare costs through the roof and created inflation to the point that many need to rely on credit and borrowing just to stay in the middle class. Nothing creates poverty and misery like liberalism does.
Having said all this, Democrats never take responsibility for their failed policies because to admit failure is to admit a flawed ideology and power hungry dictators like Obama have far too large an ego to ever admit failure. His first term has been an unmitigated disaster with laughably stupid economic policy that continues to create additional unemployment and anemic economic growth but he won't take responsibility for it.
The only thing Obama will do to try and get re-elected is to blame Bush and continue to attempt to deliver the utopian fantasy he promised everyone in 2008.