Taxes and Population Growth Revisited


Last month I criticized Greg Mankiw and Michael Barone for attributing rapid population growth in many conservative-leaning states to their low income tax rates rather than to there construction-friendly regulatory regimes. Thinking harder on the question, I think there may actually be some growth/tax correlation running in the opposite direction.

Consider that the tax base of a given state not only needs to pay for current levels of public services, but also pensions and health care for retired state employees. Consequently, a faster-growing population will actually reduce the per capita tax burden of these retiree payments, allowing for lower taxes or higher levels of present-day services.

At any rate, consider that another small reason that liberals should rally behind Paul Krugman’s call for our states to become more density-friendly. I, personally, find Blue America to be a pleasant place and I think we should permit more people to live in it.