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Outside the Box: Federal tax cuts would cripple local governments

Art Laffer and Stephen Moore recently penned an op-ed in the Wall Street Journal in which they called on state and local policy makers to support the Trump tax cuts. They claimed that the Trump plan would provide a significant boost to state and local tax revenues, thereby allowing states with large budget deficits to “regain fiscal health.”

State and local lawmakers should not be fooled by these claims. The reality is that Trump’s tax cuts are more likely to worsen state and local fiscal health than improve it.

Laffer and Moore’s argument basically goes as follows: the economy grew much faster under Ronald Reagan, who cut taxes, than under Barack Obama, who raised taxes; therefore tax cuts spur growth.

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