President Joe Biden and congressional Democrats have spent the last year pushing vast tax increases. They are completely out of step with tax policy at the state level.
While Biden is trying to raise taxes in the face of rising inflation, supply shortages, and higher interest rates, the majority of states are cutting personal and corporate taxes.
In 2021, 18 states enacted tax cuts, with most of them reducing corporate or personal taxes — or both. Arizona cut individual tax rates and small business taxes. Arkansas, Nebraska, and Oklahoma cut corporate tax rates, and North Carolina passed a bill phasing out all corporate taxes. So far this year, 19 states have proposed new tax cuts, including cuts in tax rates and reductions in gas and food taxes to fight inflation.
In Iowa, Gov. Kim Reynolds has proposed a major tax reform plan that includes cutting the corporate tax rate nearly in half. In Michigan, the state is moving to cut individual and corporate tax rates. And in Idaho, the governor has just signed into law the biggest tax cut in the state’s history.
All of these states are getting it right, doing the exact opposite of what Biden and Democrats want to do. Tax cuts will help fight inflation by increasing production and expanding supply. They will help businesses meet overseas competition and help offset the coming interest rate increases.
As Democrats face a challenging 2022 election cycle, they would do well to look at the better example offered by many states.
Bruce Thompson was a U.S. Senate aide, the assistant secretary of the treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
