Tuerck speaks at Heritage Foundation

from NewsLink, Vol. 3 No. 3, Spring 1999

The less a state taxes its residents and businesses, the better it positions itself to compete successfully with other states. States that enact broad-based tax reductions, such as personal income tax cuts, lay the groundwork for more powerful boosts to their economies than states that enact targeted tax cuts. While targeted tax cuts may be politically popular, they usually do little to build a state's economy.

BHI Executive Director David Tuerck spoke to this theme at the 1999 Heritage Foundation Resource Bank Meeting in Philadelphia in April. As one of two panelists addressing the topic, "Fundamental Tax Reform," he described the importance of measuring the effects of proposed state tax-law changes through dynamic modeling.

“Be suspicious when you hear that a state is relying on static modeling to analyze its tax policy,” Tuerck said. “You need a dynamic model that considers complex but crucial factors like how taxpayers will respond to any proposed change.”

Tuerck described BHI's State Tax Analysis Modeling Program (STAMP), first used in Massachusetts in 1994 and since applied to Oklahoma, New Jersey, Ohio and, in 1999, to Texas. STAMP uses state-specific data to determine how tax-rate changes affect selected economic indicators within a state. “We are able to predict how many jobs will be created or lost, how much money will be derived for business investment and what the cost to the state's coffers will be. That helps policymakers make informed decisions.”

Also on the panel was Brian Wesbury, Vice President and Chief Economist for Griffin, Kubik, Stephens & Thompson, a Chicago investment banking firm.

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