Imagine your favorite NFL team entering summer camp following an off-season training regimen of no exercise and a diet of unlimited Big Macs, Twinkies, and Coke. Sound outrageous? Such a thing would be unheard of in the competitive NFL, but among several of our country's flabby state legislatures, I have to wonder.
Vacationing in western New York last week, I picked up a copy of the Buffalo News. Two items caught my eye. The "Quote of the Day" in Friday's sports section came from Buffalo Bills receiver Roscoe Parrish who said, "It's training camp, so every day you go out there, you got to approach it like it's your last." Contrast Parrish's compete-for-survival attitude with New York Gov. David Paterson's front-page remarks about his state's bloated budget. "It doesn't tax much, either," Paterson said.
"How much is not much?" the Buffalo News asked. "Try $1 billion --- [in new taxes] at least." Compared to last year's New York record-setting budget, with tax increases of a whopping $6-to-$8 billion, this year's budget doesn't tax much. How about another Twinkie, Gov. Paterson?
New York could use a leader with Parrish's training camp mentality because states, like NFL teams, play in a competitive league. The NFL has 32 teams; the United States has 50 "teams" and New York is projected to finish dead last (50th) according to a competitiveness study by the American Legislative Exchange Council. ALEC uses 15 variables in its "Economic Outlook Ranking." Consider some of these New York Twinkies:
Top marginal Income Tax Rate: 12.62%
Top Marginal Corporate Income Tax Rate: 15.95%
Property Tax Burden per $1,000 of Personal Income: $42.81
Recently Legislated (2008-2009) Tax Changes per $1,000 of Personal Income: $91.75
Tax policies like these are causing New York and other states to lose fans. ALEC reports that New York is the biggest loser in "net domestic migration" --- people leaving New York for other states --- over the past 10 years with a loss of 1.7 million residents. California follows New York by driving away more than 1.4 million wealth generators, and Illinois and Michigan are only slightly less bad by chasing off nearly 650,000 and 450,000 respectively.
Where are these migrant taxpayers going? The top gainers are Florida (projected 5th best economy in 2010), Arizona (projected 3rd best economy), Texas (19th), North Carolina (21st), and Georgia (9th).
Still not convinced states play in a competitive league? ALEC reports that Indiana's (#20) Gov. Mitch Daniels put up a billboard on the Michigan (#26) border saying, "Come on IN for lower taxes, business, and housing costs." Idaho's (#7) Governor C.L. "Butch" Otter wrote a "love letter to neighboring businesses in high-tax Oregon" (#41). And a convenience store straddling the Kansas-Missouri line (#s 25 and 15) built a new location 100 feet further into Missouri to reduce its tax burden by $1.4 million.
The ALEC report makes several common-sense recommendations based on proven tax and budget practices to make states more competitive. Moreover, ALEC provides compelling evidence that raising tax rates actually reduces tax revenue. So why do flabby states like New York continue their losing ways when several states compete effectively year after year? And why do our federal leaders in Washington, D.C., do the same? ALEC's study offers 50 diets to choose from and economic health-conscious legislators will want to steer clear of New York's Twinkie diet.