There aren’t many stories these days about government working for the people, but in the nation’s laboratories of democracy—the states—you can find rare instances of success. The Cato Institute’s Director of Tax Policy Studies, Chris Edwards has cataloged the successes and failures of the nation’s governors in the Fiscal Policy Report Card on America’s Governors 2012. For an idea of what governors, and state governments, can do right, read the excerpts from Edwards’ report below. These are descriptions of positive policy actions taken by the four governors who earned an A-grade in the rankings.
Sam Brownback of Kansas signed into law one of the most impressive tax reforms of any state in recent years. Brownback called for a “fairer, flatter, and simpler” income tax system and he proposed a detailed reform plan. In May, the legislature delivered a plan to his desk and he signed it into law. The reform simplified the personal income tax structure from three tax rates to two and cut the top rate from 6.45 to 4.9 percent. It also increased the standard deduction, reduced the taxation of small business income, and repealed numerous special-interest tax breaks. The cuts are expected to save Kansas taxpayers about $800 million a year.
Rick Scott of Florida has championed major tax and spending reforms. He has proposed substantial budget cuts, vetoed hundreds of millions of dollars of wasteful spending, and trimmed state employment. Scott is also determined to give Florida the best economic climate for business investment and job creation in the country. He wants to phase out the corporate income tax (CIT), and he has made progress toward that goal by raising the CIT exemption to end the tax for thousands of small businesses. Scott’s plan to cut taxes on business personal property is on the November ballot. If citizens approve the plan, it would end this tax for about 156,000 businesses.
Paul LePage of Maine signed into law a major income tax cut. The reform reduced the top individual tax rate from 8.5 to 7.95 percent, simplified tax brackets, and reduced taxes on business investment. LePage then signed legislation to reduce the top individual tax rate to 4 percent over time if there are sufficient budget surpluses. The governor says that his ultimate goal is to phase out the individual income tax completely, and he wants to cut the corporate tax rate from 8 to 4 percent. LePage has also focused on spending cuts. He signed into law reforms to reduce the costs of welfare, health care, and pensions, and he wants to end funding for Maine Public Broadcasting, calling it “corporate welfare.”
Tom Corbett of Pennsylvania has been a frugal budgeter. The state is expected to spend less next year than it did when he came into office. Corbett is also pursuing the phase out of the Capital Stock and Franchise Tax, which is paid by 100,000 Pennsylvania businesses. So far Corbett has sliced the tax from $819 million a year to $479 million, and he plans to fully repeal it by 2014. Corbett argues: “This tax is a job-killer. . . . We don’t need it. We don’t benefit from it, and we must get rid of it.’’
To read the entire report, click here.
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