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New Englad - Tax Reform Pioneer?

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I read today very interesting post that analyze the reasons why Rhode-Island is moving toward Flat Tax rate. Basically it is because they have no choice! Once neighboring states offer no income tax or flat tax the population and businesses migrations into these states have impact that cannot be simply ignored.

Link: I Fell Over in Shock

In case you don’t know it, New Hampshire (a strongly libertarian state) has no income tax and Massachusetts enacted a flat income tax two years ago (Teddy must have apoplexy). The problem Rhode Island faces is that they are not competitive with their neighboring states. So, small businesses and affluent residents are fleeing to Mass and NH. The whole concept of competitive government actually does work, you know. It’s tougher on the West coast with large states. But even here it works. One of the Liberty Papers contributors, Brad Warbiany, fled California because of its unstable budget, repressive tax structure and high cost of living. And he isn’t the only one, by a long shot. California is growing, but it’s not the middle class that’s growing. And RI has the same problem. So, they are going to try and fix it, because the loss to their neighboring states is clear and obvious. They are even proposing to enact sales tax holidays. My guess is that they lose significant business to Mass on their sales tax holidays.

It turns out that big government liberal ideology can, occasionally, be changed by reality smacking you in the face.

Who would have believed that the tax reform will start from New England?

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Written by Rogel

February 11th, 2006 at 9:27 pm

Posted in Libertarianism, The Free Market

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