Saturday, August 05, 2006

What Corzine Said

The Tax Foundation's Tax Policy Blog had an interesting headline, Corzine Denies He's a Supply-Sider, But.... The premise of the post was that Governor Jon Corzine of New Jersey had made pro-supply-sider comments while denying that he was a supply-sider. William Ahern, who authored the post, either did not read the newspaper article in which Corzine was quoted or failed to understand his comments.

In the article, Corzine Opposes Any Increase in State Income Tax, in the Courier Post Online, Corzine stated that:
he believed the income tax rates were so high that they were near the point where they could be cut, which in turn might spur economic growth and bring more money into the state's coffers.

"I have a . . . view that you could almost lower taxes on income and generate revenue," Corzine told the Asbury Park Press editorial board.
Ahern interprets this as support for the theory of supply-side economics, the idea that you can raise government revenue by cutting taxes. This theory is allegedly illustrated by the Laugher Laffer Curve.

As I noted here, the wealthy have a greater ability to minimize their taxes by picking an appropriate state for their domicile. That was the point that Corzine was focusing on, not some subtle support for supply-side nonsense. The article makes this clear:
Reports have said New Jersey has lost residents and jobs in high-paying sectors in recent years. Some experts argue the state's taxes and high cost of living are to blame.

Corzine indicated Thursday that he was looking at that issue. He said New Jersey's income taxes made the state "less attractive" than Connecticut, and put it at a "competitive disadvantage" to Pennsylvania and Delaware.
In other words, Corzine was examining the question of whether Jersey's tax rates were driving businesses and wealthy individuals into near-by states, not whether lower taxes would spur economic growth resulting in higher state revenues.

One can debate the merits of supply-side theory. But one should not cherry-pick partial quotes from elected officials (or anyone else for that matter) that seem to support the theory when it is clear from their full comments that no such support was intended or implied.

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