National Taxpayer Group's Study Confirms the Benefit of Governor Pawlenty's Tax Plan

3/13/2003

From: Pete Sepp or Jennifer Morris, 703-683-5700, both of the National Taxpayers Union

ALEXANDRIA, Va., March 13 -- Throughout the country Governors have resorted to tax hikes in hopes of balancing their bloated budgets quickly, while ignoring evidence that tax hikes only worsen economic instability. That's why Minnesota Governor Tim Pawlenty's decision to avoid tax hikes earned applause today from the 335,000-member National Taxpayers Union (NTU). The group has more than 8,000 members in Minnesota.

"Governor Pawlenty's new tax plan is a refreshing change from that of tax-hiking Governors across the country. His proposed policy to trim expenses and reorganize funds has been proven to be the most effective way to bail states out of an economic crisis," NTU President John Berthoud stated. "Governor Pawlenty is following sound economic advice."

Berthoud's comments are supported by his recent study, Solutions to the State's Budget Ills published by the National Taxpayers Union Foundation (NTUF), warning that tax increases are the wrong solution to state budget shortfalls. The study reviews a range of research showing a strong causal relationship between higher taxes and poor economic performance. States which enacted tax hikes during the last budget crisis (in the early 1990s) experienced slower income, employment, and population growth during the ensuing decade.

"The message of history is clear: ratcheting up taxes is a devastating poison pill for state economies. This lesson would be particularly true now, given the nation's current sluggish growth. Further, voters have made very clear that they already believe the tax burden - which is at record levels in many states - is already too high as it is."

Berthoud also praised the efforts of the Taxpayers League of Minnesota, whose "tireless work on behalf of fiscal restraint helped to maintain pressure on policymakers to do the right thing for overburdened Minnesotans."

Bill Owens (R-CO), Mark Warner (D-VA), and Craig Benson (R-NH) are leaders who - at least for now - are working to resolve budget shortfalls without resorting to higher taxes. "These leaders have heard the message from voters and are stepping up to the leadership plate by delivering smaller, smarter government, rather than more taxes. We have encouraged Governors around the country to follow their lead and are pleased to add Minnesota Gov. Tim Pawlenty to this list," Berthoud concluded.

The 335,000-member National Taxpayers Union is a nonpartisan organization founded in 1969 to work for lower taxes, the elimination of wasteful spending, and more accountable government. The National Taxpayers Union Foundation (NTUF) is its research affiliate. For more information, including copies of the NTUF Policy Paper 140, Solutions to the States' Budget Ills, is available online at http://www.ntu.org or by calling 703-683-5700.