Report: Personal income tax cuts not a good economic growth strategy

Report: Personal income tax cuts not a good economic growth strategy

A big take home from the report released Thursday by the Center on Budget and Policy Priorities is that states that were able to thrive after cutting their income taxes had something to fall back on to replace lost revenue – namely oil and natural gas.

Surging energy prices brought billions into gas- and oil-rich Oklahoma, New Mexico and Louisiana. Revenue from gas- and oil-production taxes offset funds these states lost from the deep income tax cuts they enacted in the 2000s.

Three other states — Arizona, Ohio and Rhode Island — slashed income taxes in the 2000s and their economies suffered. They didn’t have oil and gas to fall back on.

Experience around the country clearly shows that tax cuts do not produce economic growth. So if you want to cut taxes you better have a backup revenue source to make sure you can pay for education, transportation and the other building blocks of job creation.

At last check, Nebraska – where talk of income tax cuts is underway — is not home to major oil or natural gas reserves. Nor does the state have a thriving tourism industry, which is another resource states lean on to offset lost income tax revenue.

So unless the next Great American Oil Field springs up near McCook or Disney World moves to Chadron, income tax cuts in Nebraska likely would force the state to raise other taxes, cut vital services – or both.