Panos Prevedouros, PHD

BY PANOS PREVEDOUROS PHD – In the text below, I copy the analysis done by the Illinois Policy Institute titled Do Higher Taxes Chase Away People, Wealth, and Jobs?

I changed one word: Illinois to Hawaii. It all makes perfect sense for Hawaii. With one difference: Illinois charges moderate-to-high taxes. Hawaii charges very high taxes. So the call to reduce taxation is much more urgent for Hawaii than it is for Illinois.

Nationwide data from the last ten years show states that limit their tax burdens economically outperform those that don’t. High taxation drives people, wealth, and jobs out. Lawmakers should emulate the low-tax, business-friendly policies of high-growth states.

The table below makes it clear: Nationwide data indicate that high tax burdens hurt economic growth. From 1998 to 2008, the ten lowest-taxed states economically outperformed the ten highest-taxed states on many key measures.


The lowest-taxed states (2008 state and local taxes as a percentage of personal income) include Oklahoma, Texas, South Carolina, Colorado, Missouri, Oregon, Alabama, Tennessee, New Hampshire, and South Dakota.

The highest-taxed states include Alaska, New York, Wyoming, North Dakota, Hawaii, Maine, Vermont, New Jersey, New Mexico, and Connecticut.

The economic “winners circle” is clear. Hawaii is nowhere near it. Government spending reduction and tax reduction are necessary. The alternative is what we’ve got: Prolonged economic stagnation and prayer that the tourists will come. And for those who did not get to the bottom of it yet, the proposed rail is permanent heavy taxation, the results of which are described in the table above.

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