More on Moore’s Strategic Tax Cuts and Employment

Stephen Moore goofed again and Paul Krugman does something novel – actually looking at the data:

Actually, if you’re going to do something about state job growth, the very least you should do is bear in mind that the recession and recovery have had differential effects across states, so that you might want to look at job growth over the whole period of recession and recovery. If you do, the figure shows what you see for Moore’s four states … Texas is, not surprisingly, the best performer. New York comes in second, followed by California, with Florida in last place. Not much of a clear ideological message there. Nor should you expect there to be. Real empirical work on state growth shows multiple factors — mildness of climate, cheap housing, high wages, and yes, some impact from tax rates. The idea that you would find an overwhelming one-factor correlation with taxes alone is something only a, well, Heritage foundation analyst could believe.

If one compares employment in California as of June 2014 to where it was 7 years ago, it has risen by an incredibly modest 0.36%. What I found really amazing is that Moore did not present any information about Kansas. Employment in this state also suffered during the height of the Great Recession and over this same 7 year period has risen by a mere 0.04%. Of course, Moore’s oped is loaded up with excuses why supply-side tax cuts might not pan out in real world starting with the title:

Give Kansas tax breaks time to work

He also tosses in this goodie:

Well, it’s true, tax cuts don’t have magical powers, and it is an often-repeated caricature by the left that Laffer and I and others believe that to be true. There are dozens of reasons why some places grow and others lag behind — and taxes are only one of them. But what is irrefutable from the evidence in the states, not just Kansas, is that strategic tax-rate reductions can ignite growth and employment. Memo to Krugman: Read our new book: “An Inquiry into the Nature and Causes of the Wealth of States.”

You see – if a tax cut did not lead to an employment boom, Moore would argue it was not “strategic”. Dandy! Here in New York - where employment has risen by risen by 3.52% over the past 7 years – we have to endure statements from the governor of New Jersey about his supply-side policies. So how are they working out? Despite all of Christie’s shooting about record employment growth, the reality is employment is still 3.32% below where it was 7 years ago. I guess “voting with their feet” has a problem when Christie’s budgetary policies get in the way of fixing bridges and building tunnels. But hey – he kept gasoline taxes low. Or was it the reductions in public employment that caused this anemic performance? The balanced budget multiplier in action. But I have faith in the shifty charlatan known as Stephen Moore to praise this from New York:

Governor Andrew M. Cuomo today formally launched START-UP NY, the game-changing initiative that, starting today, will create tax-free zones to attract and grow new businesses across the state.

Oh boy – I bet this makes it in the 2nd edition of Laffer and Moore’s book. Pardon me if I don’t bother to read the 1st edition.