Federalism

01.25.13

Red State, Blue Nation

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Kansas and Louisiana are the latest states seeking to abolish the income tax. Good. It's heartening to see limited government conservatism alive and well at the state level. From Wisconsin to Lousiana to Texas, Republican Governors are enjoying tremendous success passing legislative agendas to shrink and better manage government.

Such efforts also carry an exciting prospect for tax reform. A growing number of states with lower property taxes and nonexistent income taxes is a powerful force for efforts to repeal the federal deduction for state and local taxes. (H/T Josiah Neeley)

One warning: such efforts will lead to ever an shriller outry that Republicans are horrible, inhumane people who don't care about anyone but the rich. (See the primary example here). Ever diverging models of red and blue state governance, with red states cutting social insurance and services, might spell demand for that spending to be replaced at the federal level. In the long haul, Republicans may well win state level battles on taxes but lose the broader war to restrain the federal government.

- MORE TO COME -