The Problem with Tax Cuts

Leo Toribio Pittsburgh, Pa.

In a recent article appearing in the NYT, Paul Krugman discusses how "...conservatives have long held Texas up as a supposed demonstration that low taxes on the rich and harsh treatment of the poor are the keys to prosperity."  

As Governor of Texas, Rick Perry cut taxes.  But at the time, Texas enjoyed a prosperous economy (mostly due to the market for hydrocarbons), and when you have more money coming in, cutting the tax rate does not reduce government revenues. 

Due to a nationwide increase in production of natural gas and renewable energy -- and yes, oil -- the nation's dependence on hydrocarbons produced in texas has declined, and its tax revenues declined correspondingly.  

But other states, like Kansas, who tried to cut taxes without doing anything to spur their economies have encountered serious problems.  

The truth is that legislation to reduce taxes isn't necessary. When the private business economy declines, so do tax revenues.  

Posted In: Union Matters

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