Each year, many state legislatures consider expanding tax breaks for retired taxpayers in an effort to attract them to the state, with the presumed goal of helping improving economic growth.
In the lead article in Contemporary Economic Policy, John A. Hogan Distinguish Professor of Economics Karen Conway and her coauthors Ben Brewer (UNH PhD 2017) and Jon Rork provide evidence that such tax breaks do not improve state economic growth and could even be harmful. Using both state and federal policy changes over the last several decades, their analyses show that tax breaks on low income taxpayers – regardless of age – are more likely beneficial for economic growth. Tax breaks for the high income elderly, which nearly all proposed tax breaks are, are the least beneficial and may even be harmful.
