How Lower Municipal Tax Rates Can Promote Employment, Population & Personal Income Growth

22 August 2011

One of the biggest secrets why some cities in the United States never had problems in terms of growth is because of the fact that these cities have lower tax rates compared to the other states. In fact, economic growth and municipal tax rates play a big role on a certain state’s potential growth – the lower the rates are, the faster it grows.

Take Florida for example – the municipal tax rates here are better compared to some of the cities in NY. Miami is one of the most successful cities in the country in terms of developments and growth. That is why Florida is one of the most preferred places to live in all of the United States.

But which triggers which? I mean is that the reason why places like Miami or Austin has been great at keeping the balance in terms of tax rates and growth in harmony with each other? Is it because of the low tax rates that triggered growth to these places, or is it the other way around? Well, that is the beauty of the balance.

What is more interesting about states with lower tax rates is that it promotes job and career growth opportunities, and as well as real personal income growth – giving people a lot of buying power to maximize profits. According to Professor Stansel, who have checked the statistics of the top 10 states in the country that has low tax rates as opposed to the 10 states that have higher or on an average scale – there is more growth present in states with lower tax rates because it simply means it is easier to live in places like those.

If you are going to compare the statistics with the low tax rate states versus high tax rate states – population growth in lower tax states grew by 64 percent against high tax rate states’ 21 percent. Furthermore, in terms of employment – 108 percent coming from low tax rate states as opposed to 40 percent.

That is why places like Orlando, Tampa and St. Petersburg, Florida has been successful all these time for 30 years now. If Miami follows Tampa’s tax rate, then more employment growth can make Miami more successful.