Wednesday, January 25, 2006

A little free-market competition between states

The Club for Growth blog has a post up about the competition between New Hampshire and Vermont. It seems that NH's lower taxes and less regulation is resulting in businesses selecting NH over VT. Tell me why Virginia should be catching up with Maryland in taxes again Sen. Chichester? To borrow the phrase that NLS used the other day, "DON'T MARYLAND VIRGINIA!"

6 Comments:

At 1/25/2006 01:14:00 PM, Blogger Bwana said...

Another example one has to consider-and Chichester should remember this, as it happened about the time he ran for Lt.Gov., occured in Bluefield, Va/WVa.

For those unfamiliar with the town, Bluefield sits on the state line of Virginia and West Virginia, just like Bristol, VA/TN.

Back about 1984/5, West Virginia changed their BPOL tax policy. Previously there had been a flat fee+an additional fee based on net proceeds...if you made money, you paid higher taxes.

West Virginia was in one of its Dropping-price-of-coal state recessions, and the legislature amended the BPOL so the additional fee was based on gross income, and not net.

Bluefied saw several commercial concerns that were located in the WVa part of town move to the VA part of town to avoid the tax.

 
At 1/25/2006 02:20:00 PM, Blogger J.Sarge said...

To play a little devil's advocate then:

Why not simply ensure that all our tax rates are just marginally lower than surrounding states? Wouldn't that maximize revenue while maintaining a competitive advantage?

 
At 1/25/2006 03:13:00 PM, Anonymous Rtwng Extrmst said...

A marginal decrease is not enough to attract business from higher tax areas. There must be a significant increase for it to be worthhile for them to move. I will agree that a marginal difference would probably allow us to sap more $ from business here without them moving, but that depends on what the other states do. In the end it's a bad policy all around to raise taxes.

 
At 1/25/2006 03:26:00 PM, Blogger J.Sarge said...

"In the end it's a bad policy all around to raise taxes."

Extremist, something tells me that your last sentence was driving the train on the rest of that analysis!

 
At 1/25/2006 04:45:00 PM, Anonymous Rtwng Extrmst said...

From a business perspective, it's absolutely true. The only reason there is support in the business community here for tax increases is because the development industry in business is so big here. They want more state funds devoted to transportation so they can get that money in contracts from the state. Otherwise tax increases depress the business environment.

 
At 1/26/2006 07:47:00 PM, Anonymous NoVA Scout said...

competition is almost alwyas good. that includes tax policy. That is one of the great advantages of a federal system. In my day job, I look at tax policy internationally. what's fascinating now is how the former soveit bloc countries hav ebeen daring in their tax policies. the Western European countries hate it and are trying to use international organizations like OECD to "level the playing field" on taxes. In the US and abroad, I say (to quote Mao) "let a thousand flowers bloom." the best tax ideas will attract the most economic activity. If Virginia is a better tax environment than Maryland, business will vote with its feet. If California wants to tax the eyeballs out of business, let it. Someone will gain. the market does an excellent job of sorting out what works.

 

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