Sales vs. Income Taxes: The Verdict of Economists

The March 15, 1994, statewide ballot question asked voters to weigh the pros and cons of school finance. The central question was this: Which does the least economic harm-the sales tax or the income tax? Economist Dean Stansel maintains that theory and empirical evidence suggest that consumption taxes are less deleterious than taxes on income, investment, and savings. Connecticut imposed a new income tax in 1991 and economic growth evaporated and job opportunities and population declined. We should learn from the experience of states with high income taxes. 9 pages.