Bjorklund and Stricherz have little reason other than electionering against Rep. Lange to oppose the income tax and other efforts to make our state's tax system more progressive. States like Minnesota with progressive tax systems are just as likely to enjoy healthy economic performance and business climate as state like South Dakota with regressive tax systems.
Think tank Minnesota 2020 studied the correlation between state tax structure and state economy in 2008. Minnesota 2020 ranked the states for tax progressivity, then ranked states on six different indices of economic well-being: economic performance, business vitality, development capacity, competitiveness, and two different measures of quality of life.
The results: comparing the progressivity rank with ranks with each economic index produces a slight positive correlation. In other words, states like Minnesota that move away from sales taxes and toward income taxes have a slightly better chance of having good business climates and quality of life than states like South Dakota that stick tax the poor harder than the rich. The correlation isn't much—the highest is a measly 0.20 on the economic performance index—but where it does show up, the correlation smiles on the tax system Gerry Lange proposes.
Now this doesn't mean you can't achieve relatively good economic results while laboring under a regressive tax system. South Dakota ranks 46th for progressivity in taxes, yet we come out in the top ten on three of the economic indices used in this study. We also rank 48th in business vitality, a measure of competitiveness and job growth from new businesses.
But you can also enjoy relatively good economic outcomes under a progressive system:
Why is this? One explanation is that states with the most progressive tax systems are better able to finance the educational and transportation infrastructure and the public services that a modern economy requires because they don't shift a disproportionate share of the burden of paying for these investments to households with the least ability to pay. The loss of high income households due to progressive taxation is offset by an increased ability to pay for public investments [Jeff Van Wychen, "Progressive Taxation: Not So Bad for Business After All," Minnesota 2020, 2008.01.21].
The evidence keeps building that Gerry Lange is right and South Dakota's tax system is wrong. Remember that at the polls tomorrow.