|Phoenix — As the debate rages on about Proposition 208, the Invest in Ed Initiative, the Grand Canyon Institute has published a policy brief that fact checks the latest critique of the effort to increase education funding by levying an income tax surcharge on the state’s highest income earners.The paper commissioned by the Arizona Chamber Foundation puts forward claims about the initiative’s economic impact while not taking into account the benefits of increased education spending.What is wrong with the Arizona Chamber Foundation’s study?
- Strike 1: It assumes that a state’s economic performance is determined solely based on income tax rates without taking into consideration other factors such as education levels of the workforce and proximity to critical markets. When GCI looks at the same states and focuses on per capita personal income from these states, GCI found a strong correlation between higher per capita personal income and higher per pupil K-12 expenditures.
- Strike 2: Contrary to the paper’s dire migration findings, robust studies repeatedly find that taxes have very little to no impact on migration levels. Laffer’s claims of significant losses in new residents in the state are grossly exaggerated.
- Strike 3: Laffer’s effort to bind economic growth with low income-tax policies like Tennessee and North Carolina are quickly shown to be false. North Carolina’s unemployment decline lagged behind the national economy, and Tennessee’s employment growth was surpassed by high marginal income tax states of California and Oregon.
The Grand Canyon Institute has not taken a position on Prop. 208, but it has published an independent analysis that provides the most comprehensive evaluation of the initiative’s economic and educational impacts. The Grand Canyon Institute focuses on providing quality evidence-based analyses to help frame policy discussions and inform voters.
For more information, contact:
Dave Wells, Research Director
602.595.1025, Ext. 2