Back in January 2010, I proposed an imperfect if interesting little test.
The states of Oregon and Georgia, I noted, had a lot in common economically.
“… median household incomes in Georgia ($50,861) and Oregon ($50,169) are quite similar. They start from a similar base on taxes as well, since Oregon voters have a tradition of fiscal conservatism equal to that of Georgia. In 2005, Oregon ranked 41st in per capita state taxes ($1,791) while Georgia ranked 42nd ($1,726), according to the Census Bureau.”
However, the two states were taking quite different approaches to the economic challenges of the recession. While Oregon, like most states, had already been forced to slash its budget, voters in that state had also just approved ballot measures that increased taxes on businesses and on households with incomes higher than $250,000. The new revenue allowed Oregon to close its remaining budget gap of $727 million and fend off further cuts in education and other public services.
Georgia, of course, was taking the opposite tack. Not only was its leadership refusing to consider tax hikes of any kind, they were insisting that additional tax cuts were needed to make the state more attractive to business.
So which course of action would prove more effective? While it’s still too soon to declare a definitive winner, we do have some early data to consider.
Just to be clear, I’m not arguing that the difference in tax strategies caused the difference in outcomes. Quite the opposite. I’m arguing against the prevalent foolishness that tax strategies exert some powerful, determinative influence on economies that in fact are enormously complicated and subject to all kinds of feedback loops, outside influences and sheer random chance.
In this case, Oregon was able to keep teachers in the classroom and cops on the job while also enjoying a significant drop in unemployment. Since January 2010, Oregon has added 46,000 jobs to an economy less than half the size of Georgia’s, while Georgia actually lost 2,600 jobs in that same time frame.
In fact, the Bureau of Labor statistics reported today that the Portland metropolitan area had enjoyed the nation’s single biggest one-year drop in unemployment (from 10.5 to 9 percent) while metro Atlanta, as we discussed earlier, experienced the greatest job loss of any metro region in the country.
– Jay Bookman