From Tax Flight to Economic Growth: Jonathan Williams on American Radio Journal

As Washington, DC hums with debate overextending the Tax Cuts and Jobs Act of 2017 — the Trump tax cuts — and slashing wasteful spending through the Department of Government Efficiency (DOGE), we have an incredible opportunity to rethink the size and scope of the federal government in the lives of everyday Americans. Meanwhile, the states lay bare the choices: fiscal discipline paired with tax relief or reckless spending capped by tax hikes. The results aren’t random. Economics rewards the prudent and punishes the profligate.

Look at Maryland, practically in Washington, DC’s shadow, where Governor Wes Moore and the legislature face a $3 billion deficit — a self-inflicted wound from overspending after years of budget surpluses under Republican Governor Larry Hogan. Their remedy? Tax increases. Moore wants to hike the top income tax rate which, with local taxes included, could reach a whopping 9.7% — near the nation’s highest. He’s also pushing a 2.5% tax on business services and so-called combined reporting, forcing businesses to report nationwide earnings to Maryland’s tax authorities. This isn’t clever — it’s a stick-up. Businesses and workers don’t wait around to be fleeced; they leave. Maryland’s competitiveness fades, and its budget gap widens as taxpayers vanish.

On the West Coast, Washington State confronts a $16 billion shortfall over four years. A 2022 capital gains tax was pitched as a fix. Instead, it drove wealth out. Jeff Bezos fled to tax-free Florida, saving $1 billion in the process. Washington once knew better. Post-2001 recession, Governor Gary Locke tackled a $2.4 billion deficit without tax hikes, cutting waste and sharpening priorities. Now, Governor Jay Inslee peddles a wealth tax and business levies. A state that once boomed with opportunity now leaks residents. Its policies have become a master class in decline unfortunately.

Elsewhere, states like Maine and New Jersey lean on excise taxes on firearms, tobacco, alcohol, and gaming to patch budgets. One particularly concerning example comes from the Buckeye State, where Ohio’s Governor Mike DeWine wants to double the sports betting tax from 20% to 40%. When lawmakers in Ohio legalized sports betting and taxed it at a 10% rate back in 2022, it was meant to kick-start the industry. But now, Governor DeWine is squeezing again. Jumping from 10% to 40% taxes is not a strategy — it’s government greed, plain and simple. People avoid these taxes by betting in unregulated offshore markets, cutting back, or bolting. Revenue stays shaky, but the mirage persists. This time, the tax increase is sold to help Cleveland pay for a new football stadium. Taking a step back, real conversations need to be had around the idea of governments funding professional sports stadiums owned by billionaire owners. That needs to be a real conversation across the states before taxpayers are asked to pay more.

Contrast this with states choosing common sense over expedience. Louisiana, in December, ditched its progressive income tax for a flat 3% rate — the sixth state since 2022 to reject the myth that soaking the successful fills budget coffers. This flat tax revolution is a story that needs to be told and retold, especially since the Washington, DC media is more fixated on the gossip of the day versus real tax reforms that impact millions of hardworking taxpayers across the country. One of the flat tax states, Idaho, just this week shaved its flat tax again by nearly half a percentage point, proving reform can build momentum. Kentucky’s flat tax fell to 3.5% last month as part of their plan aiming to eliminate the personal income tax outright. These states see what Washington, DC often misses: lower taxes spark growth, not grievance.

All told, more than half of the states have substantially reduced personal income taxes since 2021, and many more may follow this year. Governors across the nation are calling for income tax cuts to hone their states’ economic competitiveness. This isn’t altruism — it’s calculation. States that lighten tax burdens draw talent and investment; those that keep piling on taxes lose both. The pattern is clear. Tax-cutting states versus tax-hiking states provide us with incredible laboratories of democracy.

The lesson for Washington, DC is apparent. Tax-hiking states like Maryland, Illinois, and New Jersey watch economic life ebb as Americans vote with their feet, chasing freer ground. Punish residents and firms, and you’ll get less of each. Couple that with fiscal folly, and the spiral tightens — more taxes chase dwindling taxpayers. Tax-cutting states, however, see the reverse: growth and in-migration. People work for themselves, not bureaucracies. As Washington, DC wrangles over the 2017 tax cuts, the echoes of this state-level split grow louder. States raising taxes sound a warning: competitiveness dies, and deficits linger. Economics isn’t guesswork — incentives drive behavior-and when government takes less, people produce more.