I’ve actually been writing about this for years and the topic is well-suited for my Symptoms of the Disease series. A state’s tax policy really does effect business and personal decisions, we all know this. Beyond the break, the Center for Freedom and Prosperity has a new Economics 101 video for you to watch on the subject.
Tax competition between towns, cities, states and federal governments does work. One of the big problems we have – not discussed in the video – is states and local communities who are becoming more and more dependent on the federal government for funding day-to-day operations. By shifting the burden from the local communities and states to the federal government you actually destroy true competition between the states.
The only competition left would be the fight to beg for funding for major projects like slow-speed trains and smaller projects like brick crosswalks. You’ll have “winners” and “losers” determined by the political power base.
I’m not saying there is no competition between the states. We know there is, but the federal government involvement in everything from health care to education to water regulations is crushing the competition we could be having.
This defines our disease that must not be ignored. Power and funding has incrementally shifted from the states to the federal government during the last 60-plus years and the progressive/liberal/statists want this to happen as they continue their efforts to share the wealth and redistribute it in their own perverse way.
If we take all of the unconstitutional duties away from the federal government, the states and local government will need to raise taxes to cover funding previously provided by the federal government. We move from a part-monopoly to a competition-based tax system run exclusively by local government.
What’s the result?
Stand back and watch schools churn out better prepared students at a lower cost. Watch efficiency rise! Competition works and your government will be soon working with businesses and individuals as partners to provide the services we want at the lowest reasonable cost with the highest justifiable quality. That’s what happens when you introduce true competition into the equation.
We don’t get that with the likes of President Obama holding the purse-strings.