Want proof low taxes work? Just take a look at the state of New Hampshire, as MSNBC "Morning Joe" host Joe Scarborough astutely pointed out.
On the Feb. 2 broadcast of his MSNBC program, Scarborough interviewed Sen. Jeanne Shaheen, D-N.H. Shaheen's home state was hosting a jobs town hall put on by President Barack Obama and Scarborough used the occasion for a teachable moment.
"Now, usually none of us would celebrate unemployment rates of 7 percent," Scarborough said. "But that is not only well below the national average, but your neighbor, Rhode Island, to the south of you now sitting with a 13 percent unemployment rate. What's New Hampshire doing right?"
According to Shaheen, it was a diversified economy and a sound climate for business, where regulation doesn't interfere.
"Well, hopefully, as you say, we're going to be able to reduce that 7 percent even lower," Shaheen said. "But I think we've got a diversified economy. We've got a place where people want to live. We've got a wonderful quality of life. It's a beautiful state. It's a state where we've tried to limit regulation, where we've tried to make the cost of doing business affordable for businesses."
However, Scarborough pointed out one key difference in New Hampshire compared to other states - no state income tax and no sales tax.
SCARBOROUGH: You all don't have a state income tax, do you? [“Morning Joe” co-host Mike] Barnicle just told me that.
SHAHEEN: We have neither a state income nor sales tax.
SCARBOROUGH: That will do it. I'm moving to New Hampshire.
BRZEZINSKI: That’s very helpful.
SHAHEEN: But actually, we do have business profits tax.
SHAHEEN: And a payroll tax of sorts.
SCARBOROUGH: Yeah, but that's good, though.
SHAHEEN: We also try and work with the private sector and partner in a way that we get the best bang for our buck when we look in government.
Scarborough, a former Florida Republican congressman, explained that if other states were to follow New Hampshire's lead, particular states that border large metropolitan areas, they would reap the rewards of people fleeing higher taxes.
"Wow, isn't that something?" Scarborough said. "You know, Connecticut used to have a low tax structure. And when they did, unemployment was lower. They had no income tax. If they still had no income tax, I guarantee you a lot of people with a lot of money in New York City would be living in Connecticut right now and increasing that tax base exponentially. But isn't that something? And I guess Rhode Island has high tax rates."
And Scarborough is right. As the Tax Foundation shows, the 2010 business tax climate ranks Rhode Island 44th out of 50 states. Rhode Island's state/local tax burden is the 10th highest nationwide and its individual income tax system are the fifth highest nationally. New Hampshire on the other hand according to the Tax Foundation is the seventh business friendly nationally, has one of the nation's "most simple and inexpensive" individual income tax systems and has a state/local tax burden percentage ranks 46th highest in the nation.