The effect of taxes on a state’s economic health is one of those repeated questions that is never resolved.  The obvious reason (I’d propose) is that it’s one of those areas that depends hugely on specific circumstances, but the ideological intentions of those having the discussion tend to promote specific findings as broad conclusions.

The last sentence of the most recent academic contribution to the debate, by Pavel Yakovlev of the Mercatus Center, probably captures about the broadest statement that can be made:

… not all tax variables exhibit a significant correlation with the selected measures of economic activity, but when they do, the relationship is usually negative.

Yakovlev concludes his summary in a way that’s probably more comprehensible to the average person:

Not all types of tax increases can be expected to significantly harm economic outcomes, but higher taxes are generally correlated with lower standards of living.

In the phrasing of a popular meme: I don’t always affect the economy when I increase taxes, but when I do, it usually hurts.

Another important variable that Yakovlev mentions in the course of presenting his findings is the quality of public services provided.  It is assumed that in some circumstances (or at least to some people) the trade-off of higher taxes for quality government services favors the latter.  Presumably, it is less common for people to want to have high taxes in order to finance poor government services.

Throughout the study, Yakovlev looks at two competing ways of calculating the correlation of variables that can sometimes serve to support different ideological preferences.  On the government-spending side of the ledger, the results find a positive correlation between taxpayer migration and education spending, but negative correlation of migration with infrastructure spending, public health spending, and public welfare spending.

Especially on the infrastructure count, that finding might be counter-intuitive, because we tend to think of better roads and bridges as a contributor to economic health.  One plausible explanation for the results is that the amount of spending on infrastructure doesn’t translate well into results.  In other words, over a basic minimum of spending on roads and bridges, additional dollars are wasted.

Of course, an objective viewer of Rhode Island would have to conclude that this level of discussion is mostly moot in the Ocean State, as the latest competitiveness report card from the RI Center for Freedom & Prosperity illustrates.

All of our taxes are high.  Most of our services are poor.  People are generally leaving; opportunity remains difficult to find.  And the hope of substantive change is limited.