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Know the Facts: Personal Income Tax and the Economic Growth of States

January 30, 2013

Who Grows?

1. From 2001 to 2011, states without a personal income tax of any kind experienced average annual GSP growth of 4.81%, whereas states with a tax structure similar to that of present-day Louisiana experienced average annual GSP growth of 3.69%.
2. States without personal income tax grew their economies on average 1.13% more each year than those structured like present-day Louisiana.
3. Had Louisiana’s economy grown 1.13% more each year between 2001 and 2011, it would have been 6% larger (about $15 billion or more than 100,000 jobs) than its actual size at the end of 2011.
4. Texas, a state with no personal income tax, grew at an average annual rate of 5.15% between 2001 and 2011. New York, a state with a relatively high personal income tax, grew at an average annual rate of 3.49%.
5. In 2001, Texas’s economy was $42 billion smaller than New York’s economy. By 2011, Texas’s economy was $151 billion larger than New York’s because of its faster economic growth.
6. From 2002 to 2012, 62% of the three million net new jobs in America were created in the nine states without an income tax.