A recent study by the Goldwater Institute has demonstrated that low-tax and low-spending states are more successful at reducing poverty than their high-tax, high-spending counterparts. As President Reagan noted, a rising tide lifts all boats.
The 10 states with the lowest tax burdens saw a 13.7 percent decline in poverty during the 1990s (more than double the national average), according to the study by Matthew Ladner, PhD. Meanwhile, the 10 states with the highest tax burdens suffered an average poverty rate increase of 3 percent. The poverty rate dropped nationwide during the decade, the report notes.
The same correlation was found with spending. The 10 states with the lowest per-capita spending benefited from a sizable decrease in overall poverty. The 10 biggest spenders saw poverty increase 7.3 percent.
Texas has historically been among the low tax, low spending states, which has enabled us to attract and generate more private sector jobs, which is the factor that the study found was most critical in reducing poverty.
The lesson for Texas policymakers is that they should resist calls to increase spending on government programs intended to reduce poverty because the very best way to reduce poverty is to create a favorable business climate through lower taxes and less spending.