I was wondering whether the states that tax their residents<\/p>\n
at high rates tend to have higher or lower income levels. I<\/p>\n
suppose a crude form of free-market economics would predict that states<\/p>\n
with lower taxes would tend to generate more personal income. This is<\/p>\n
not the case. Although the relationship between tax rates and per capita<\/p>\n
income is not significant, generally the states that take the biggest<\/p>\n
portion of income in state and local taxes also have the most <\/em>per<\/p>\n capita wealth. States like Alabama have been low-tax zones for at least<\/p>\n a hundred years, yet they remain among the poorest of all states.<\/p>\n This isn’t "social science." It’s just playing with a computer<\/p>\n to get a quick answer to a simplistic question. Still, the graph poses<\/p>\n a real question for supporters of laissez-faire economics: if low taxes<\/p>\n create wealth, what explains Alabama? (Sources for the tax<\/p>\n![](\"http:\/\/www.peterlevine.ws\/images\/statetax.JPG\")
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