Texas shows the way to avoid recession

Wall Street Journal Editorial:

When budgets begin to tighten, many state politicians start to talk tax hikes. So credit Texas Governor Rick Perry for cutting taxes this week as a way to keep his state as a national leader in job creation. Mr. Perry suspended the state unemployment insurance "replenishment" tax for the rest of the year on grounds that government doesn't need the money but employers do.

By law, Texas must keep at least 1% of all taxable wages in the state in its unemployment trust fund, or some $920 million today. The trust fund now stands at $1.6 billion, is growing by the day and isn't in any immediate danger of being drained. Texas has a near record low unemployment rate of 4.3%, enjoys a job creation rate that is twice the national average, and in January added 28,000 net new jobs -- more than any state in the union. With numbers like that, there is little reason for employers to "replenish" a trust fund that is already flowing over.

Governor Perry is saving Texan businesses $260 million all told in unnecessary unemployment taxes. In recent months he has also directed the state to rebate $170 million that employers paid into the trust fund in 2007.

...


Perry has been a better governor than his press as a general rule. The state's job growth has come at a time when other states are contracting. His decision on this trust fund is just one of the reasons why employers who have a choice are choosing Texas over states like Ohio and Michigan where businesses are punished with high taxes. I am sure it is one reason why Toyota built its new Tundra truck plant in San Antonio instead of Detroit.

Texas has also largely avoided the high default rates on mortgages that have afflicted the high tax high regulation states. Housing is more affordable to begin with so there is less need for sub prime mortgages for people to qualify for loans. During the late 70s and early 80's there were a lot of Michigan and Ohio license plates on the Texas freeways. It appears that those states have learned little from that earlier migration.

Low taxes and low regulation are keys to prosperity. You would think that liberals would catch on.

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