Redistributing Poverty

Katherine Mangu-Ward from the July 2007 issue

In theory, redistribution of wealth is supposed to benefit the least fortunate. In practice, it doesn’t necessarily work out that way. In a new study, Matthew Ladner of the Goldwater Institute and Paul J. Gessig of the Rio Grande Foundation crunch census data for the 1990s and find that the poor did much better in states with low taxes and low spending than in states with higher taxes. Big-spending, high-taxing states saw increases in poverty rates, despite a national economic boom. On average, big spenders in Alaska, Connecticut, Delaware, Hawaii, Massachusetts, New Mexico, New York, Rhode Island, Vermont, and Wyoming saw a 7.6 percent increase in poverty rates, while cheapskates in Arizona, Florida, Georgia, Indiana, Missouri, Nevada, New Hampshire, Oklahoma, Tennessee, and Texas saw their poverty rates drop nearly 10 percent.