| March 28, 2013

Debunking tax myths in Oklahoma

As we head into the second half of Oklahoma’s 2013 legislative session, conservatives continue to make the case for pro-growth tax cuts, while our friends on the left (liberals, progressives, socialists, whatever) continue to oppose them. As is the case with so many other issues, what we’re dealing with here is, at its root, a case of conflicting worldviews. In the current issue of Perspective, Ph.D. economists Eric Fruits and Randall Pozdena (formerly the research vice president at the Federal Reserve Bank of San Francisco) do an excellent job of explaining this clash of visions.

In short, the authors make the case that Oklahoma’s progressives (have you ever noticed how “progressive” policies have regressive results?) and tax consumers continue to advocate for “a large and growing role for government and the public sector.”

This approach is born out of a belief that the free market is fundamentally flawed and subject to numerous market failures. The implicit belief system of such advocates is that regulations can mitigate market failures without any economic cost. This belief system supports the notion that public enterprise can replace private firms and that taxes serve the dual progressive role of raising revenue to support the public enterprises while redistributing wealth to those who are deemed to deserve it more, whether earned or not. … The policies of the progressive movement in the United States spring from a philosophy that has neither theoretical nor empirical foundation. It has its foundation in a mistaken belief that personal effort, entrepreneurship, and risk-taking are unrelated to the economic health of the nation and that the benefits of that initiative can be redistributed without adverse consequence.

By contrast, the authors say OCPA’s preferred approach — economic freedom, low taxes, and smaller government — is the foundation for economic growth. (They also say the OCPA/Laffer study — “Eliminating the State Income Tax in Oklahoma: An Economic Assessment” — is “well-founded in widely accepted theory and empirical work.”) I encourage you to read the entire article here.

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