Tax Competition Heats Up Nationwide as New Hampshire Becomes the Eighth No-Income Tax State

Today ATR president Grover Norquist issued the following statement

by John Kartch, Americans for tax Reform

Today ATR president Grover Norquist issued the following statement:

“On January 1, the State of New Hampshire became the eighth state with no state income tax.

New Hampshire joins Florida, Texas, Tennessee, Nevada, South Dakota, Wyoming and Alaska on the no-income-tax list.”

(The state of Washington recently lost this status as Democrats imposed a capital gains tax there.)

“New Hampshire has never had an income tax on wages, but the state did tax dividends and interest at five percent. Residents saving for retirement paid taxes on savings and investments.

New Hampshire’s abolition of the last vestiges of the state income tax is part of a nationwide competition among the 50 states to reduce taxes to encourage investment, new jobs and the movement of people, both younger Americans beginning their working lives and older Americans retiring.

Federalism allows states to compete to attract new citizens and job creation by providing the best government at the lowest cost. No-income-tax states like Florida and Texas now see other states gaining on them in the rear view mirror, marching quickly to cut off the dead weight boat anchor of a state income tax.

The race is on to become the ninth no-income-tax state.

Many states are now moving to phase their state income taxes to zero. North Carolina began the phase out twelve years ago with the creation of a trigger: when tax revenue comes in above a set spending limit the state income tax is automatically reduced.

In 2013, NC’s personal income tax rate was 7.75% and is now 4.25%. The state corporate income tax rate was 6.9% and is now 2.25%.

Iowa is on the same path, dropping their personal income tax from 8.6 percent to 3.8 percent and the corporate income tax from 12% to 7% in the last four years—on the way to zero.

West Virginia and Kentucky have enacted triggers to reduce their income taxes to zero. Louisiana, Mississippi Arkansas, Missouri, Utah, Oklahoma, and Missouri have governors elected committed to moving to a zero income tax.

Arizona has brought its income tax rate to a flat 2.5% and awaits a Republican governor to join the state legislature in moving the tax to zero.

This is a very healthy and cheerful competition to reduce taxes, attract investment and jobs by reducing the state income tax to zero over time. Blue states benefit as well as their politicians slow their tax hikes out of fear of losing even more citizens and job creating investment if they keep hiking taxes.

Americans for Tax Reform will work to achieve ’50 by 2050′ — all 50 states income-tax-free by 2050.”

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