To no one’s surprise, the federal government should follow the lead of states. With inflation at 8.3% and at a 40-year high, it’s reasonable to expect that Washington would be pursuing policy to curb inflation rather than fan the flames further.
But instead, as State Policy Network senior policy advisor Michael Lucci notes, a federal government run by single party control is pursuing tax and spend plans that would raise the federal deficit, undermine growth, and do nothing to lower prices.
“As the federal government has failed on economic policy, states have fought back against inflation with pro-growth tax and regulatory policies that provide a lesson for federal policymakers. Better managed states safeguarded their economies during the pandemic by taking a lighter approach to lockdowns. Perhaps unsurprisingly, a study from economists at the University of Chicago, the Heritage Foundation, and the Committee to Unleash Prosperity found that more open states, such as Utah, Florida, and Arkansas, performed much better than states that locked down, such as New York, New Jersey, California, and Illinois.
“Since then, dozens of states have been busy enacting policies that increase supply rather than demand. In 2021 and 2022, 24 states cut their individual income taxes, corporate taxes, or both. Permanent income-tax rate reductions leave more dollars with residents and increase the incentive to work and invest rather than to consume. Even as the federal government caused the worst loss in the dollar’s purchasing power in 40 years, fiscally disciplined states have partially preserved family purchasing power by returning more dollars to taxpayers.
Read Lucci’s complete commentary in the American Spectator here.