AUSTIN – Internationally renowned economist Dr. Arthur Laffer declared Texas the knockout winner of its economic rivalry with California and predicted a bright future for the Lone Star State due to its commitment to low taxes and limited government.
“The result of a head-to-head competition between Texas and California is an economic blowout,” Laffer said. “The economic environment in Texas has significant advantages over California. The implications of this competitive advantage are clear; Texas’ economic prospects are bright and the Texas economy will significantly outperform California’s.”
Laffer made his announcement at a luncheon in Austin sponsored by the Texas Public Policy Foundation, the Texas Association of Business, and the Texas Conservative Coalition Research Institute.
“Working with the legislature, we laid the foundation for today’s economic success by creating a reasonable regulatory climate, competitive job creation fund and one of the lowest tax burdens in the country,” said Texas Gov. Rick Perry, who accepted the accolades and spoke at the luncheon. “Today we are reaping the benefits of these policies and are able to cut taxes while other states are cutting budgets.”
The Foundation also released a paper authored by Dr. Laffer, “Competitive States: Texas v. California – Economic Growth Prospects for the 21st Century.” The report contrasted Texas and California on six broad categories that have been proven to affect a state’s economic competitiveness: taxes on labor, taxes on capital, taxes on consumption, overall tax environment, regulatory environment, and government spending policies.
Laffer’s analysis declared Texas a decisive winner in five of the categories, with “taxes on consumption” scored as a tie.
“Texas’ current prosperity and California’s struggles are not a coincidence,” said Foundation president Brooke Rollins. “Businesses want to locate and people want to live where government doesn’t get in their way with excessive taxes and regulation. As long as these states continue on their current paths, businesses and people will continue to flee California for places like Texas.”
The report is available for download from the Foundation’s website, . Video of the luncheon, including the remarks by Dr. Laffer and Gov. Perry, will soon be available in the site’s multimedia section.
Dr. Arthur Laffer is the founder and chairman of Laffer Associates, an economic research and consulting firm that provides global investment-research services to institutional asset managers, pension funds, financial institutions, and corporations. He is the creator of the “Laffer Curve,” an innovation that earned him the distinction as the “Father of Supply-Side Economics.” He was a member of President Reagan’s Economic Policy Advisory Board for both of his terms.