Why Local Governments Should Adopt Lower Tax Policies

The principles of lower taxes that have driven national economic revivals are equally vital at the local level. Mayors, county supervisors, and city councils should prioritize tax reductions not as optional reforms but as essential strategies for fostering prosperity, attracting investment, and enhancing community well-being. High local taxes—particularly property, sales, and business levies—often deter growth, while cuts create a virtuous cycle of expansion. By applying supply-side economics locally, governments can stimulate private sector activity, broaden their revenue base, and reduce reliance on inefficient spending.

Economically, lower local taxes boost competitiveness. Cities and counties with reduced burdens become magnets for businesses and residents fleeing high-tax areas. For instance, Nashville, Tennessee, cut property tax rates in the 1990s and invested in infrastructure, leading to a population increase of 30% and a thriving music and healthcare economy.

Examples such as Nashville, illustrate the Laffer Curve in action: lower rates expand the tax base through increased economic activity, often yielding higher revenues. Arthur Laffer noted, "Too high a tax rate causes revenue to fall insofar as it makes the economy weaker." At the local level, this means property values rise as more people and firms relocate, offsetting initial cuts. High local taxes, conversely, stifle innovation and exacerbate inequality. They impose deadweight losses, discouraging homeownership, small business starts, and investment. In high-tax cities like San Francisco and New York, residents and companies have migrated to lower-tax locales, leading to budget shortfalls and service cuts.

Milton Friedman argued that taxes reduce incentives: "High taxes... discourage the productive use of resources." Locally, this translates to fewer jobs and slower wage growth. Ronald Reagan, who championed federal cuts, extended the logic: "The problem is not that people are taxed too little, the problem is that government spends too much."

Local officials often overspend on bureaucracies, but lower taxes force fiscal discipline, prioritizing essential services like public safety over wasteful projects. From a libertarian perspective, Murray Rothbard viewed all taxation as coercive, stating, "Taxation is theft... on a grand and colossal scale." At the local level, where taxes fund visible services, reductions empower individuals, allowing voluntary spending on community needs. Studies show that targeted local tax cuts, like those in Opportunity Zones under the 2017 Tax Cuts and Jobs Act, have revitalized distressed areas by attracting billions in investment, creating jobs in rural and urban neighborhoods alike.

Critics claim cuts favor the wealthy, but evidence shows broader benefits: lower taxes correlate with reduced unemployment and higher median incomes.

Detroit's revival, aided by property tax reforms post-bankruptcy, transformed it into a top startup hub, with population stabilizing and investment soaring.

Local leaders should follow suit to avoid stagnation, as seen in high-tax states like Illinois, where out-migration hampers growth.

In summary, lower tax policies at the local level unleash entrepreneurship, enhance fiscal health, and promote liberty. By heeding thinkers like Friedman, Reagan, and Rothbard, mayors and supervisors can build thriving communities where growth benefits all, proving that less taxation truly means more prosperity.