A recent column by the KC Star’s Steve Rose (available here
) tried to make the case that states with no income tax are only able to do so because they have unique revenue sources. Examples he gave included gambling in Nevada, tourism in Florida and oil & gas in Texas, Alaska and other states. Fortunately, Mr. Rose didn’t do his homework.
The key to having a low tax burden and/or no income tax is not access to extra revenue; it's how much you spend.
Yes, some states with no income tax have unique revenue opportunities but they could just spend more and have higher taxes like other states. Instead, they’ve figured out that they can have good quality government services AND high job growth by controlling spending and keeping taxes low.
The nine states with no income tax spent $1,767 per resident in 2009 out of their General Fund. That was 27% less than the national average and 21% less than Kansas. If Kansas had spent at the rate of the no-income-tax states, we would have spent $1.1 billion less that year.
KPI compiled research comparing the states with the highest tax burden to those with the lowest tax burdens and also those with no income tax. The low burden states dramatically outperform high burden states on job creation, gross domestic product, wage & salary distribution and domestic migration (U.S. residents moving in and out of states). The states with no income tax tend to do even better. Check out the facts here
at our tax reform page.