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Why taxes matter after all
By Stephen Moore
The Washington Times
January 14, 2018

One premise of modern-day “progressives,” is that taxes don’t have much influence on how much and when people invest, how much they work and save, or where they live.

Boy, has the just-enacted Trump tax bill already proved these critics wrong.

With the recent Walmart announcement of an increase in their starting wage, there are now more than 100 companies that have offered bonuses and benefit hikes to their workers due to the tax cut. An estimated one million workers have benefited. This after one month.

The blue state governors have argued for many years that their high tax rates don’t cause people to move — even though the two highest income tax states, California and New York, have each lost about one million residents to other states over the past decade.

Some blue state governors and mayors are examining whether they can convert their income taxes into payroll taxes (which could be deductible off federal taxes as a business expense for employers) as a way to preserve federal deductibility. Some are even threatening to sue the federal government as if this tax deduction were a constitutional right.

Why go to all this trouble if taxes don’t matter?

The timeless economic lesson here is that taxes profoundly influence how and where we live our lives. There are proposals all over the country to tax soda pop, sugar, and carbon emissions so we consume or produce less of them.

So why is it so hard to accept the reality that if we lower taxes on virtuous activities — work, investment, starting a business, or saving for retirement — we will get more of these?

Read the full column here.