High technology, not low taxes, may drive states' economic growth

Jun 23, 2011

High-tech training may trump tax breaks for creating more jobs and improving a state's economy, according to a team of economists.

"We found that lower state taxes were not statistically associated with a state's ," said Stephan Goetz, professor of and regional economics, Penn State. "The tax climate was not linked to either growth or income distribution."

Goetz, who serves as director of the Northeast Regional Center for Rural Development, said states that favor low taxes do not necessarily spend funds efficiently. They may skimp on funding needed public services like road maintenance and education. Those costs are often transferred to businesses directly or become obstacles for businesses seeking to attract qualified workers to the state.

"It's essentially a case of you get what you pay for," Goetz said. "You can't attract businesses if you can't provide needed public services."

While lower taxes were not factors in economic growth, the researchers, who released their findings in the current online issue of Environment and Planning C: Government and Planning, said policies that promoted the use of high technology and entrepreneurship were significantly correlated with and economic growth.

States with more technology classes in school, higher domain name registrations and more people online tended to economically outperform states with a lower emphasis on technology.

"It does indicate that states that have already moved into the online economy are better able to create jobs," Goetz said.

The researchers examined data from each state for 2000 to 2007. The datasets included common economic growth measures including changes in income, poverty, and employment. They also collected data on economic development strategies used by the states to promote economic growth, such as estate, , corporate and property taxes; regulatory policies; tax incentives; and public expenditures on education, public safety and highways.

Goetz, who worked with Mark Partridge, professor, and Shibalee Majumdar, doctoral student, both of Ohio State University; and Dan Rickman, professor, Oklahoma State University, said lowering taxes is often categorized as a race-to-the-bottom policy and investing money in technology is considered a race-to-the-top strategy.

"Race-to-the-top policies are generally defined as those involving investments in education, entrepreneurship and infrastructure," said Goetz. "In contrast, race-to-the-bottom policies involve competition among the states for jobs by using lower taxes and industrial recruitment incentives."

Goetz said that the importance of finding the right mix of race-to-the-top and race-to-the-bottom policies to stir economic recovery is growing for state officials.

" is an important issue that preoccupies economists," said Goetz. "It's especially important with the lackluster economy and the threat of a possible double-dip recession."

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User comments : 43

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freethk
5 / 5 (5) Jun 23, 2011
Great study, now how do we get the mainstream media to report this instead of the usual talking points delivered by our misinformed and out of touch politicians?
89118a
3 / 5 (2) Jun 23, 2011
Better luck getting it on the Daily Show or Colbert.
ryggesogn2
1.5 / 5 (8) Jun 23, 2011
More BS.
Do states that have high taxes spend that confiscated wealth efficiently? Govt employees tend to suck up those high taxes in wages and pensions. Is that efficient?
kaasinees
5 / 5 (2) Jun 23, 2011
More BS.
Do states that have high taxes spend that confiscated wealth efficiently? Govt employees tend to suck up those high taxes in wages and pensions. Is that efficient?

That will happen low taxes or not. even no taxes or not. there will always be greed, capitalism.
Gilbert
5 / 5 (3) Jun 25, 2011
mm yeh rygg i think you missed the point, they've found that it doesn't matter what the taxes are, as long as the state spends money on technology infrastructure, for example...

Sweden, France, Belgium, Germany are very powerful economies, they have the highest tax rates in the world.

Sth Korea,the UK, New Zealand, Australia, Japan, United States, Switzerland are very powerful economies, they have low tax rates relatively.

All top economies in the world, all spend Highly on Tech Infrastructure
ryggesogn2
1.6 / 5 (7) Jun 25, 2011
Yes, it does matter what the taxes are.
Sweden dropped its wealth tax to encourage the wealthy to stay in Sweden to invest.
When govts have high taxes and no accountability, political corruption sets in as we see in MA.
MA and San Fransisco are great technology incubators, but they are very poor at leveraging that technology to benefit economic growth. That wealth is used by the 'progressives' to buy votes with welfare to the poor and corporations. Also, it draws in a crowd of busybodies that force people to live in old, cramped housing. Concord, MA is a nice town, but few can afford to live their. Same for Lexington and many other Boston burbs. And these same people force manufacturing to leave the area.
And when taxes are too high, people vote with their feet. States with no income tax are growing.
Sweden, France, Belgium, Germany are very powerful economies

Really?
ryggesogn2
1 / 5 (5) Jun 25, 2011
"Government spending consumes scarce resources that could be used for productive investment and distorts the incentives faced by individuals and firms."
"Respect property rights and the rule of law. Without adequate protection for property rights and a secure political environment, individuals and firms will face severe disincentives to invest and engage in productive activities."
"it is important that education systems operate primarily to educate students rather than to serve the ends of "social justice" or of powerful political groups."
{Maybe this is why Sweden uses vouchers.}
http://www.herita...c-growth
Gilbert
5 / 5 (3) Jun 25, 2011


Sweden, France, Belgium, Germany are very powerful economies, they have the highest tax rates in the world.



uhhhmm... yeh they are???;

http://en.wikiped..._GDP.jpg

"World Economic Forum 2010 competitiveness index ranks Sweden 2nd most competitive, behind Switzerland."
http://www.weforu...tiveness

ryggesogn2
1 / 5 (4) Jun 25, 2011
"states that favor low taxes do not necessarily spend funds efficiently. "
The converse is true as well. States that have high taxes drive business away with waste, fraud and corruption.
So tax rates are important.

You should define 'powerful economies'.
According to this list, only Sweden is in the top ten.
http://data.world...lue_2009 wbapi_data_value wbapi_data_value-last&sort=desc

ryggesogn2
1 / 5 (5) Jun 25, 2011
'Now history is about to repeat itself as Texas, Louisiana and other Gulf Cities seek to reorder the nations economic balance of power. Unless California and the Northeast awaken to the challenge, they will be increasingly supplanted by a region that seems more determined to expand their economic dominion."
http://blogs.forb...-in-u-s/
California and the northeast have high taxes.
TheGhostofOtto1923
4.2 / 5 (15) Jun 25, 2011
"A Greek debt default appears inevitable, and the potential for financial contagion is significant. What is the US government doing to avoid a financial crisis, and to prepare for the various contingencies that may be anticipated? One would think that, after living through the events that followed the collapse of Lehman Brothers in 2008, some responsible government officials in the United States would be asking these questions." -guardianuk

-See marjon this is what happens when your glorious systems of govt and economy are allowed to run their course for even a little while. People will always take more than they need and politicians will always promise them more than they can deliver because nobody is around long enough to be held accountable.

Your economies devour themselves and your govts expedite the process. They are the most preferred because they offer the ability to do these things - until they collapse, which is inevitable as history shows us.

Anarchy in the UK
ryggesogn2
1.6 / 5 (7) Jun 25, 2011
See marjon this is what happens when your glorious systems of govt and economy are allowed to run their course for even a little while. People will always take more than they need and politicians will always promise them more than they can deliver because nobody is around long enough to be held accountable.

I don't support socialism and have so stated many times.
If a govt has limited power, it can't make promises it cannot keep.
TheGhostofOtto1923
3.9 / 5 (14) Jun 25, 2011
I don't support socialism...
no really?
If a govt has limited power, it can't make promises it cannot keep.
It is not either/or. And govts don't make promises, politicians do. And as long as there is a system based on electing people who will promise you anything in order to win, and are gone and retired before the results of their perfidy are realized, then either system will fail. Without Control from Above.

Human nature makes these systems, and their failure, inevitable. Obviously. The only way they can work is if they are Contrivances of a Greater Government, which regulates and manipulates them from behind the scenes.

As the cycles of growth, instability, collapse, and rebirth are unavoidable due to the human propensity to overpopulate when times are good (7 yrs of feast - 7 of famine - remember that?) then the only way to maintain overall Stability and Progress is to derive benefit from these cycles. For this they must be Planned and the results Predetermined.
TheGhostofOtto1923
3.9 / 5 (15) Jun 25, 2011
I think it can be surprisingly easy for a relatively few People to accomplish these sorts of things, including staging the most dangerous of Inevitabilities, that being war of course, if They 1) understand the true nature of humanity and 2) are willing to be very very patient.

They wrote your bible you know, which explains exactly how They planned to subdue the species and conquer the world. Hint- it's not about YOUR salvation, but what you would be willing to do in order to secure it. As to saving the world, so far so good.

Don't quite understand? Well let's see what these fellers have to say:
http://www.youtub...a_player
TheGhostofOtto1923
4 / 5 (12) Jun 25, 2011
Nothing yet? Let's check in with the maestro for clarification:
http://www.youtub...a_player
ryggesogn2
1.6 / 5 (7) Jun 25, 2011
"investing money in technology is considered a race-to-the-top strategy."
Who decides what technology to invest in? Govts have historically failed to predict the correct technology to waste taxpayer's money on.
BTW, I won't watch any videos posted. I can read faster than they can talk.
sstritt
1 / 5 (3) Jun 25, 2011
In the last 10 years, Texas has created more jobs than all the other states combined. No need for further arguments- just ask WWTD?
TheGhostofOtto1923
4 / 5 (12) Jun 25, 2011
"investing money in technology is considered a race-to-the-top strategy."
Who decides what technology to invest in? Govts have historically failed to predict the correct technology to waste taxpayer's money on.
Govts wage war which is the prime motivator of tech development.

And it depends on what you mean by 'govt'. Money is issued by the fed at the Proper Time to banks which then lend it out to support whatever industries are slated for the next Cycle. Laws are passed which favor these industries and subsidies are made available if necessary. Investment in them naturally generates taxes but this is incidental to the tech that they are required to develop and disseminate.

Govt and 'private' institutions work together to make sure things work as they are supposed to. Because they all belong to a Higher Power.
BTW, I won't watch any videos posted. I can read faster than they can talk.
They were for entertainment purposes only. Somebody will appreciate them I'm sure.
ryggesogn2
1.8 / 5 (5) Jun 25, 2011
I submit this story is another example of this site and the authors of the study to influence the political debate in the USA.
The socialist regime in the USA wants to raise taxes instead of cutting spending and reforming entitlement programs.
A govt that abdicates responsibility by placing >50% of its budget on auto-pilot must be changed.
I just noted a headline than CT public unions are refusing to negotiate for reduced pay which will force the state to layoff state workers. Is this an efficient use of taxes?
Vendicar_Decarian
0.4 / 5 (38) Jun 26, 2011
"More BS.' - RyggTard

You poor boy you. Is reality contradicting your Tard Libertaian Liedeology again?

Given that you have destroyed your own nation with your "Destroy the Gubdermnet" ideology, it must bring a tear to your eye.

Vendicar_Decarian
0.2 / 5 (36) Jun 26, 2011
"The socialist regime in the USA wants to raise taxes instead of cutting spending and reforming entitlement programs." - RyggTard

I think that people should pay for the services they receieve.

LiberTards like RyggTard believe otherwise, and have spent the last 30 years bankrupting their own country in an attempt to prove their failed Libertarian Ideology.

Vendicar_Decarian
0.3 / 5 (37) Jun 26, 2011
"A govt that abdicates responsibility by placing >50% of its budget on auto-pilot must be changed." - RyggTard

A person who wants more than 50% of a government budget decided on a political whim, is a Moron's moron.

Consistency and continuity and hence social stability is lost otherwise.
Vendicar_Decarian
0.1 / 5 (35) Jun 26, 2011
"I just noted a headline than CT public unions are refusing to negotiate for reduced pay..." - RyggTard

I don't blame them.

Borrow and spend Conservatism has destroyed the American State.

And that was the traitorous plan, all along.
Vendicar_Decarian
0.2 / 5 (36) Jun 26, 2011
"Who decides what technology to invest in?" - RyggTard

That is a good question. I would avoid having any Libertarians on the Panel as their primary investment in time and energy has been to destroy their own country.

Hmmm... Who decides now? Are those decisions optimal?

Vendicar_Decarian
0.3 / 5 (37) Jun 26, 2011
"BTW, I won't watch any videos posted" - RyggTard

A Tard is as a Tard does.

For a Libertarian/Randite/Conservative, remaining ignorant is job number one.
Vendicar_Decarian
0.2 / 5 (36) Jun 26, 2011
"If a govt has limited power, it can't make promises it cannot keep." - RyggTard

Wow. Libertarian/Randite Logic is so Impressive. Lets apply the same to people and see what happens.

'If people have limited power they can't make promises they can't keep.'

Oh wait. That doesn't work does it?

People do have limited power and regularly make promises they can't keep.

You know, like the Libertarian/Randite promise that free trade wouldn't result in a loss of labor in America due to outsourcing.

Vendicar_Decarian
0.3 / 5 (37) Jun 26, 2011
The converse is true as well. States that have high taxes drive business away with waste, fraud and corruption." - RyggTard

Waste, Fraud, and corruption. You referring to Enron, Exxon, DOW chemical, Philip Morris, etc, etc.. etc... ???

Poor Libertarian Tard... You really do think that corruption is limited to governments.

Laughable.

Vendicar_Decarian
0.2 / 5 (36) Jun 26, 2011
"And when taxes are too high, people vote with their feet." - RyggTard

Then if you truly believe that U.S. taxes are too high, then why don't you just get out rather than spend your worthless, ignorant life whining about it.

Get out. Get out Now!

Tard Boy.
ryggesogn2
1.8 / 5 (5) Jun 27, 2011
I am contemplating a move to TX.
The US stands for united STATES. Each state had sovereignty guaranteed by the 9th and 10th amendments.
The federal govt promised these states they would limit their power. That promise has been broken many times.
These states can't print money and must balance their budgets. Some have had more discipline than others and we are now seeing the benefits of that discipline.
Sweden is lauded as a socialist miracle, but that is far from the truth. They faced down their crises last decade with discipline and limited govt.
"Since the mid-1990s Sweden has had only balanced budgets and even reduced the national debt from just over 80% to under 40% of GDP. The welfare system has also, slowly and step by step so that people would not notice the change, been restructured through adding incentives for people to choose productive labor instead of welfare checks. ..."
http://blog.mises...-sweden/
ryggesogn2
1.8 / 5 (5) Jun 27, 2011
Another failure of socialism:
"[People] are ashamed. The entire world today thinks that the Greeks are cheaters and the black sheep of Europe. This is very hard to accept."
http://www.time.c...,00.html
Govts that make people dependent are not doing those people any favors.
Self esteem is internal and results from real accomplishment and by taking the road less traveled.
TheGhostofOtto1923
3.9 / 5 (11) Jun 27, 2011
"On average, Texas homeowners pay more annual property tax than the rest of the nation, according to U.S. Census data interpreted by the Tax Foundation. The research also found that tax burdens relative to home value rank the Loan Star State in third place.

Melissa Castro explains the data in the Dallas Business Journal. "The median annual property tax payment in Texas last year was $2,275 - 14th highest in the nation and above the national average of $1,917," she writes."

-You could live in a trailer in the desert. With the jackrabbits and the illegal aliens. You could charge them a toll, like somali pirates.
sstritt
1 / 5 (2) Jun 27, 2011
@VD
Anger management issues and plenty of free time for your endless tirades. I'm guessing postal worker.
ryggesogn2
2 / 5 (4) Jun 27, 2011
Local and state tax burden:
2009 Rate Rank Total state and local per capita
TX: 7.9% 45 $3197
CA: 10.6%, 6 $4910
NY: 12.1% 2 $6157
MI: 9.7% 21 $3565
TN: 7.6% 47 $2752
SD: 7.6% 48 $3042
NH: 8.0% 44 $3765
NV: 7.5% 49 $3311
AK: 6.3% 50 $2973

TX does rather well.

http://www.taxfou...335.html
TheGhostofOtto1923
3.9 / 5 (11) Jun 27, 2011
'Tax burden'... so how do the property tax numbers I found work into that? Maybe your numbers are skewed with the kinds of taxes that wouldnt apply to you, or dont include taxes that would.

I think you need to break down your numbers to know what youre getting into.
ryggesogn2
1 / 5 (2) Jun 27, 2011
so how do the property tax numbers I found work into that?

Figure it out.
The Tax Foundation data is the only way to make an fair comparison.
If you rent, you won't directly pay property taxes.
ryggesogn2
1 / 5 (2) Jun 27, 2011
"California is a notoriously high-tax state, 49th in the United States in overall taxation (New York is 50th). California inflicts a flurry of taxes on residents including a state sales tax that is the second-highest in the nation and the third-highest state income tax, according to an analysis by the Tax Foundation. By comparison, Texas ranks ninth overall; it has no state income tax; and ranks 14th of 50 states for sales tax. To be fair, California scores better than Texas on property taxes because of Proposition 13, which became law in 1978, when the state was at least somewhat fiscally sane.

Even though property taxes are less-high in the Golden State, housing is not nearly as affordable as in the Lone Star State. During Chapman University's recent economic forecast update, Adibi said that housing in Texas costs a fraction of what it does in California. The median 2009 home price in Austin was $187,400, compared with Orange County's 2009 median home price of $477,200. "
TheGhostofOtto1923
3.7 / 5 (12) Jun 27, 2011
The median 2009 home price in Austin was $187,400, compared with Orange County's 2009 median home price of $477,200. "
Apples and oranges.
ryggesogn2
2 / 5 (4) Jun 27, 2011
California: high taxes, high home prices no jobs vs Texas: low taxes, low housing prices, and jobs.
Yep, apples and oranges.

http://articles.o...ck-perry
Gilbert
not rated yet Jun 28, 2011
Nothing is going to change
TheGhostofOtto1923
3.9 / 5 (11) Jun 28, 2011
California: high taxes, high home prices no jobs vs Texas: low taxes, low housing prices, and jobs.
Yep, apples and oranges.

http://articles.o...ck-perry
You're not including cost of living and salary differences for comparable work. These make your conclusions fruit salad. Not to mention quality of life- it's stinking hot in TX. Although there is more jap radiation on the west coast.
ryggesogn2
2.3 / 5 (3) Jun 28, 2011
California: high taxes, high home prices no jobs vs Texas: low taxes, low housing prices, and jobs.
Yep, apples and oranges.

http://articles.o...ck-perry
You're not including cost of living and salary differences for comparable work. These make your conclusions fruit salad.

A $100K salary in LA area is equal to a $71K salary in Dallas.
Home Price LA: $585,579.67 Dallas: $228,377.00
http://www.bankra...tor.aspx
TheGhostofOtto1923
3.9 / 5 (11) Jun 28, 2011
California: high taxes, high home prices no jobs vs Texas: low taxes, low housing prices, and jobs.
Yep, apples and oranges.

http://articles.o...ck-perry
Exactly. And that's the kind of difference in salary for the same job that you can expect. You're compensated, usually, for the disparity to attract people. TX taxes and unemployment are low because it sucks down there. And big oil pays much of them. Very little to do with libertarian ideology.
ryggesogn2
3 / 5 (2) Jun 28, 2011
Very little to do with libertarian ideology.

Keep telling yourself that. 'Progressives' are great at lying. Especially to themselves.

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