Study: Lower Taxes Do Not Boost State Economies

A new study by researchers at the Northeast Regional Center for Rural Development at Penn State shows that “lower taxes are statistically insignificant in explaining state economic performance, and that targeted tax incentives and financial assistance — as currently practiced — are more likely to harm growth and income inequality.” “Although our results are primarily suggestive, they indicate that lower taxes across the broad economy and the use of tax incentives and financial assistance programs do not stimulate state economies,” the researchers wrote. Several states have tried cutting taxes in the last few months — or are looking at new tax cut packages — in an attempt to spur economic growth.