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The Red State Model for a Post-Pandemic Economy

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The Red State Model for a Post-Pandemic Economy

The Wall Street Journal February 18, 2022
EconomicsBudgetEmployment

Republican governors are drawing a contrast with the Biden agenda of high taxation and regulation.

The 2008 recession hit state treasuries hard. Most states experienced steep declines in revenue. They responded by raising taxes collectively by $29 billion in fiscal 2009—at the time, the largest annual hike in history. The taxing frenzy, however, quickly dissipated after the 2010 elections, when Republicans won a net seven governorships, upping their count to 29. That set off an intense, often acerbic state competition to attract residents and employers, as Republican states cut taxes and reduced regulation.

Now, with a pro-tax Democrat in the White House and a lockdown-induced recession in the rearview mirror, a new clash among the states is breaking out. While several Democratic strongholds have imposed big tax increases, claiming fiscal stress and the need for “equity” in taxation, a group of Republican-led states has cut levies. The contrasts are likely to intensify as November’s elections get nearer, with 36 governorships and more than 6,000 state legislative seats in play.

Continue reading the entire piece here at The Wall Street Journal (paywall)

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Steven Malanga is the George M. Yeager Fellow at the Manhattan Institute and a senior editor at City Journal. Adapted from City Journal.

Photo by lukbar/iStock

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