Beware of legislative tax cuts that promise heaven and earth

February 13, 2013 by

You may never have heard of ALEC–the American Legislative Exchange Council–but you have experienced its long reach as out-of-state corporate giants manipulate state tax policies right here in Maine to reap huge profits at the expense of hardworking taxpayers.

ALEC’s members include state legislators along with some of the country’s biggest companies from ExxonMobil, Phillip Morris, Enron, and Corrections Corporation of America to Koch Industries, one of the richest privately held corporations in the world.

ALEC’s corporate members develop cookie-cutter legislation and then work with ALEC-member state legislators to enact these bills in states across the country. ALEC bills generally benefit the corporations that write them by giving them deep tax cuts.

Promising economic growth and job creation, some of the tax policies ALEC peddles include: cutting income taxes for corporations and high-wage earners; lowering/repealing state estate taxes; and permanently and automatically lowering income tax rates by using one-time surpluses.

Sound familiar? The governor and 125th Maine Legislature enacted all three.

The problem with these tax policies is that they fail to bring the promised economic manna from heaven. Research shows that:

[S]tate tax cuts or lower state taxes generally do not boost the economy [and] state tax cuts do not pay for themselves in the form of higher economic growth that generates more revenues…

What’s more, it confirms that:

…progressive taxes and corporate taxes do not inherently damage the economy, and taxes generally do not cause people to flee a state.

In fact, the data show that states that enacted ALEC tax policies have actually been doing worse economically than those that do not–fewer jobs created, less growth in per capita income, and lower median incomes.

According to the nonpartisan, Washington DC-based Center for Budget and Policy Priorities the research and analyses on which ALEC bases its policies:

…make many exaggerated claims, present misleading data, commit basic statistical errors, and do not control for other factors known to affect economic growth. They use techniques that manipulate data in ways that violate accepted standards of research.

In other words, the ALEC-backed policies turn to pillars of salt when you look at them closely.

These discredited tax policies are not what will grow Maine’s economy. We must invest in high-quality education, healthy families, and strong communities, not line the pockets of ALEC corporations.

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