Rep. Mike Moyle’s argument in favor of his individual and corporate income tax cuts invokes the long-held conservative ideology that decreasing tax rates will spur investment that will in turn (by implication) increase revenue to offset the effect of the cuts. The problem is, that has never been demonstrated to work. Economist Ed Lotterman, in excellent columns dated March 14, 2010, and March 21, 2010, cites some of the most respected conservative economists in debunking this myth. Ask the state of Kansas how massive income tax cuts to spur investment have been working out. Severe cuts to education and other programs and deficits in the hundreds of millions have been the result. While Moyle’s proposal is nowhere near that scale, it’s based on the same failed ideology. Multiple studies and surveys of business relocation decisions have shown that tax rates are down the list of things a business looks for, behind access to suppliers and markets (infrastructure), and a qualified workforce (education), among others. Those are two of the factors outgoing Commerce Director Sayer specifically cited in advising the Legislature to put investments in education and infrastructure ahead of tax cuts. Let’s hope the Legislature follows his advice, not disproven ideology.
Steve Wilson, Nampa