Gullible U.S. Journalists Fall for Tax Foundation Nonsense

Again this year the Tax Foundation, from sea to shining sea, fooled the American press. They released the 2010 State Business Tax Climate Index. 

From the Los Angeles Times,  "The state with the best overall business tax climate is South Dakota, ..." to the Sussex Countian,  Delaware's healthy business tax climate earned it a No. 8 ranking among the 50 states in the 2010 State Business Tax Climate Index the journalists republished the Tax Foundation press release accepting the premise that its ranking of taxation state-by-state reflected the quality of the business climate and that was a good thing.

First, the report is fundamentally flawed since, as we have noted numerous times:

• Taxes represent only a portion of revenues to state and local governments.  Fees are a significant source of revenues in those states that are adverse to progressive collection of revenues. That means that states like Wisconsin which are low fee, high tax states, are at a disadvantage in the study.
• The study ignores quality -how operational revenues are spent and the quality of the services provided.
• The study never looks at a comparison of total revenues, on a per capita or income basis, data that is readily available.
• California enacted Proposition 13, lowered taxes, destroyed its public education system, students by the millions dropped out, crime skyrocketed and the state is a mess.
• The study assumes that there is a correlation between its measurement of lower taxes and business climate.
• Not only does the Tax Foundation improperly measure inputs, but it fails to measure outputs.

The greatest sin of the Tax Foundation is that it misleads the reader to assume there is a correlation between business climate and quality of life.

Highlights from the tax foundation report which the journalists failed to note:

The Good: Based on a substantial review of the literature on business climate and Taxes, Wasylenko (1997) concludes that taxes do not appear to have a substantial effect on economic activity among states.

The Bad: States with flat rate (income taxes) score the best...

The Ugly: In reality, exempting groceries from the sales tax mostly benefits grocers, but not the poor...

Every newspaper publisher with a state or business editor who published the Tax Foundation silliness without at least searching for a professor, or honest expert on taxes to balance the story knows who to let go in the next round of lay offs.

For those interested, Wisconsin 'dropped' from 38th to 42nd.

Comments

[antpoppa]

Gullible???
Capitalism and Journalism, marching hand-in-hand holding to the same doctrine; born as twins in 1600’s England, Journalism helping to overturn Feudalism and put its brother, Capitalism, a venous system that supported new land owners claim that property is as valued as life itself, rather than Pierre Proudhon’s thought that property is theft.
As the Tax Foundation calls on its ally the Capitalistic American Press to once more to propagandize what is an arcane system of economy and government; that cripples the majority of citizens, and promotes the enslavement of the individual. A system that does not provide for education, does not provide for heath care, threatens working people with joblessness and promotes profit, hubris, and the glorification of power and monetary success. We do not have a planned economy that is oriented toward controlling production for the needs of our community. We do not have a government that acts as a counterweight against the unequal acquisitions of the wealthy. Unfortunately, the real discussion is tabo.

[antpoppa]

Journalism is the horse they rode in on. Enough!!

In old days men had the rack. Now they have the press. That is an improvement certainly. But still it is very bad, and wrong, and demoralizing. Somebody — was it Burke? — called journalism the fourth estate. That was true at the time no doubt. But at the present moment it is the only estate. It has eaten up the other three. The Lords Temporal say nothing, the Lords Spiritual have nothing to say, and the House of Commons has nothing to say and says it. We are dominated by Journalism.
Oscar Wilde

[Donald]

I find it strange that the Tax Foundation wouldn't include a ranking for federal tax dollars per capita. Many of the states ranking high in this study get massive federal subsidies that allow them to keep state and local taxes lower. Many of the state scoring low are states that provide more federal tax dollars to the federal government than they get out, and are, in fact, subsidizing the states with low taxes. The Tax Foundation appears, then, to be scoring those states high that are what I call "third world states." South Dakota, ranking 1, has three of the poorest counties in the nation, has very low personal income and has fairly high income disparity.

It appears to score high with the Tax Foundation you have to adopt a third world view of economic development.