least attractive to people both inside and outside the state , including the personal income tax .
“ You want the taxes collected in your state to be doing the least possible damage to the economy ,” says Laffer . “ You want to collect the requisite revenue you need to run the state in the least damaging fashion . This is when you decide on the taxes you should eliminate and which you should expand . Sales taxes and property taxes , if they are rationalized , are very good ways of collecting revenues necessary to run government while doing the least amount of damage . Let ’ s say you get down to 10 taxes after rationalizing . Knock it down to eight , so you have a couple of work horses to raise revenues . Then you figure out which , say two , you can eliminate and which of the other six to raise to offset the burden .”
Championing Change
Alaska is currently the only U . S . state that has successfully eliminated its personal income tax . Still , Laffer believes this could become a reality in West Virginia if the right steps are taken . He also believes rationalizing the tax code could lead to a revenue gain rather than a revenue loss as well as lower unemployment , increased wages and decreased welfare participation . He has seen it in his adopted home state .
“ Tennessee is the lowest taxed state in the nation ,” he says . “ When I moved here , I purchased my house with my first year ’ s tax savings . How cool is that ?”
Laffer has written five major papers on Tennessee . The data touts that Tennessee has no earned income tax , eliminated
its gift and estate tax and phased out unearned income tax . It also has the ninth lowest property taxes in the nation and the lowest tax burden with the largest surplus . He credits all of this to the state ’ s rationalized tax code .
He dreams of being invited to speak to the West Virginia Legislature about the Laffer Plan , and his record speaks for itself . In 2013 , his plan was implemented in North Carolina . The state cut personal and corporate income tax rates , eliminated its death tax and trimmed unemployment benefits .
“ A series of things happened in North Carolina soon after ,” he says . “ Job growth boomed . There were 200,000 new jobs added in North Carolina from 2013 to 2015 . The unemployment rate fell to 5.7 % from 7.8 %. The unemployment insurance fund went from a deficit to surplus , and the state ’ s budget racked up a surplus as revenues surged by 6 %.”
While Laffer ’ s expertise has benefitted many people , he has a soft spot in his heart for Appalachia .
“ I grew up right on the border of West Virginia in Ohio . I am Appalachia all the way ,” he says . “ These are my people . There is no state in this nation that is more deserving of good economics and more eligible for having good economics work than West Virginia . I can assure you : I will not leave you with a revenue shortage . You have to be willing to redesign your tax code and collect taxes in the most efficient way possible , but I would love to come to West Virginia and spend a few days with your leaders — Democrats and Republicans . It ’ s not a partisan thing . It is just economics . You have such good people in West Virginia , and they deserve better .” •
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