Originally published on South Carolina Policy Council.

For years, critics have pointed to Kansas as a failed tax experiment—“cut taxes and calamity follows.” That’s a myth. The real problem wasn’t the tax cuts; it was the refusal to restrain spending. Kansas lowered income-tax rates in 2012 but let government outlays surge. By 2017, deficits ballooned, and lawmakers passed the largest tax hike in state history.
​
The lesson is simple: tax reform succeeds only when paired with strict spending discipline. You cannot reduce revenue growth while spending more.

Look at North Carolina, which cut taxes, created a flat tax, and capped spending growth. It is now on track to eliminate its corporate income tax entirely. Arkansas, Mississippi, and Oklahoma are also phasing out income taxes—precisely because they combined tax relief with fiscal restraint.

South Carolina has started down this path. The 2022 reform lowered rates, with the top individual rate to 6.0%. That’s progress—but without durable spending rules, the state could repeat Kansas’ mistakes. 

Here’s how South Carolina can be “Kansas-proof”:

• Cap spending growth: Limit increases to population growth plus inflation as a hard maximum, not a target. That keeps the government from outpacing taxpayers’ ability to pay. Lawmakers should enact legislation stating that any spending changes must be less than population growth plus inflation. They should then require a high bar such as a two-thirds supermajority in order to override.
  
  
• Use surplus buydowns to cut rates: Dedicate surpluses first to buy down the income-tax rate to a flat tax and then to zero. This ensures tax relief is tied to real fiscal results—not wishful thinking.
  
  
• Flatten and simplify: Move to one low flat rate as quickly as surpluses allow, then continue to zero. Stability and predictability are magnets for people and businesses.
  
  
• Full expensing: Let businesses deduct new investments immediately, which frees up cash for expansion, jobs, and higher wages—while the spending cap ensures long-term balance.
  
  
• End carve-outs and subsidies: Stop picking winners and losers. Cut the rate for everyone instead of handing out narrow tax breaks.
  
  

South Carolina has a chance to be more than just another reform state—it can be a national leader. Roughly half the states have some form of spending cap or taxpayer bill of rights (TABOR), but most are riddled with loopholes or weak enforcement. 

Colorado’s TABOR is the most well-known, and North Carolina has paired its cap with real tax relief. Yet few states have taken the bold step of tying a strict population-plus-inflation cap directly to surplus-driven income tax elimination. If South Carolina does this, it would set the standard for fiscal discipline nationwide.

This is not austerity; it’s alignment. A population-plus-inflation cap ensures the government grows only as fast as taxpayers can sustain. Surplus buydowns provide a responsible path to a flat tax and ultimately no income tax. 

Kansas shows what happens when politicians cut taxes without controlling spending. North Carolina and others show what happens when states do it right. South Carolina should follow the proven path: spending restraint plus surplus-driven tax elimination. That’s a formula to let people prosper.

Originally published on Substack.

Across America, a quiet revolution is reshaping state tax codes. From Texas to North Carolina, from Arizona to Iowa, lawmakers are replacing complicated, graduated income tax systems with flat rates—or eliminating them. According to Americans for Tax Reform, by January 1, 2026, about half of all states will either have no personal income tax, be on a path to no personal income tax, or have a flat income tax.

That’s worth celebrating! Lower, simpler taxes make states more competitive, attract new residents, and give workers and entrepreneurs more freedom to thrive. But here’s the catch: without meaningful spending restraint, those tax cuts are temporary sugar highs. The bill will come due—and when it does, it will be taxpayers who will foot the bill through higher property taxes, sales taxes, or hidden fees.

The Zero & Flat Tax Revolution

The ATR Zero & Flat Income Tax States Map shows the momentum:

Without it, tax-cutting states risk falling into the same trap as Kansas did a decade ago—cutting rates without restraining spending, leading to budget shortfalls and political backlash. That’s a recipe for reversing reforms.

Who’s Getting It Right

• Iowa: Cutting to a 3.8% flat tax by 2027, with further reductions triggered by revenue performance.
• Arizona: Locked in a 2.5% flat tax while keeping spending under control.
• North Carolina: On track to lower its flat rate to 3.99% by 2027 while maintaining a decade of disciplined budgeting.

These states are combining competitive tax policy with responsible fiscal management, ensuring that reforms are permanent.

​Who’s at Risk

• Texas: No income tax, but seventh-highest property tax burden in the U.S. thanks to local overspending.
• Louisiana: Cutting rates without consistent spending restraint.
• Kansas: Moving toward a flat tax, but history shows that without discipline, gains can vanish quickly.

Let-People-Prosper Path Forward

If states want to lock in prosperity, they must:

1. Adopt zero or flat income taxes for simplicity and growth.
2. Tie spending growth to a maximum of population growth + inflation to prevent runaway budgets.
3. Use surpluses to buy down rates (“surplus buydown) or pay off debt—not more spending.

​My Take:

Tax competition is healthy—and it’s working. But it’s not enough to cut rates and call it a day. Without strict budget rules, today’s tax relief becomes tomorrow’s tax hike. True reform requires both sides of the ledger: competitive taxes and disciplined spending.

Conclusion:

States that get this right will be magnets for opportunity and investment. Those that don’t will find themselves back where they started—wondering why the tax cuts they passed just a few years earlier didn’t stick.

For more information on my work on this issue and potential topics I could present at your next event, please visit my website, check out my Policy Guide, and watch this video:

​What’s going on in South Carolina? A lot more than people realize—and not all of it’s good.

In this week’s Let People Prosper Show, I sit down with Sam Aaron, Research Director at the South Carolina Policy Council and one of the most promising young voices in state-level policy today. Sam and I have worked together for years on the Responsible South Carolina Budget. In this episode, we dig into the real issues driving South Carolina’s future: from runaway spending to the need for bold tax reform, smarter judicial selection, and a stronger education marketplace.

Sam is clear-eyed and sharp-tongued. He’s not afraid to say it: "Government kind of sucks at everything." But that’s not defeatism—it’s a call to action. People in government need limits, people in markets need breathing room, and taxpayers need better advocates. This episode is all about what it’ll take to keep South Carolina competitive, accountable, and free.
For more insights, visit vanceginn.com. You can also get even greater value by subscribing to my Substack newsletter at vanceginn.substack.com. Please share with your friends, family, and broader social media network. 

(0:00) – Introduction to South Carolina Policy and Guest Background
(3:04) – Sam Aaron’s Passion for Public Policy
(6:05) – The Role of Government and Economic Philosophy
(9:00) – Generational Perspectives on Economics
(11:52) – South Carolina’s Appeal and Challenges
(14:53) – Responsible Budgeting in South Carolina
(18:06) – The Debate on Spending and Tax Cuts
(20:45) – The Importance of Fiscal Responsibility
(23:57) – School Choice Initiatives in South Carolina
(26:50) – Judicial Selection and Reform
(29:42) – Future Directions for South Carolina Policy

Originally published on Substack.

It’s not what the Governor called for in his special session agenda. And it’s certainly not the bold leadership needed to finally solve Texas’s property tax crisis.

Governor Abbott’s call for this special session couldn’t be clearer:

“CUT PROPERTY TAXES: Legislation reducing the property tax burden on Texans and legislation imposing spending limits on entities authorized to impose property taxes.”

SB9 does neither.

It doesn’t cut property taxes—it just reduces the voter-approval tax rate from 3.5% to 2.5%. But that still allows local governments to grow their revenues every year without going to voters. And it leaves intact the very loopholes that have allowed those same local governments to game the system for years.

And let’s be clear about the math:
• At 3.5% growth, property taxes double every 21 years.
• At 2.5%, they double every 28 years.

So yes, SB9 slows the climb—but the mountain’s still getting steeper. Texans aren’t asking for a slower trip to unaffordability. They’re asking for the freedom to stay in their homes.

Worse still, SB9 preserves the same disaster exceptions, population exemptions, and carveouts that local governments have learned to exploit. And they’ve gotten very good at it.

Since 2015, every dollar of relief sent by the state has been met with spending increases at the local level. Cities, counties, and special purpose districts have found clever ways to grow revenue—even when their tax rates go down. Whether it’s reclassifying property, triggering disaster exceptions, or simply spending more because they know compression is coming, local governments have repeatedly eroded the relief Texans were supposed to get.

The result? Texans pay more, not less. The Legislature gets blamed for not doing enough, even as local bureaucrats quietly siphon away the savings. SB9 doesn’t stop this. It allows it to continue—just with slightly different numbers.

But here’s the good news: Texas doesn’t lack the tools to fix this. It just lacks the courage to act boldly.

The Comptroller’s office reports $3.1 billion in available revenue, and the rainy day fund is expected to hit $28 billion. The state is flush with cash—thanks to taxpayers. And yet the 2026–27 budget increases state spending by 40% over just two biennia. That’s not sustainable. That’s irresponsible.

Unless that spending is cut and restrained—and the rest returned to taxpayers—we’re setting up future generations for a fiscal reckoning.

It’s not just about homeowners either. One of the worst falsehoods in this debate is that property tax reform only helps those who already own homes. That’s both incorrect and elitist.

Renters pay property taxes through their rent. Small businesses pay them directly, every year. Everyone pays the price when capital is taxed year after year—whether they see the bill or not.

The property tax hits working Texans hardest—not just through higher bills, but through unseen barriers:

• First-time buyers blocked from entering the market.
• Seniors taxed out of homes they paid off years ago.
• Business owners unable to grow or hire because of rising overhead.

These burdens don’t show up in standard tax incidence tables, but they’re real. And they undermine prosperity every single day.

Texas doesn’t have an income tax—praise God—and our consumption-based taxes are far less damaging than the property tax. If we want to truly reform our system, we must replace property taxes with something simpler, more transparent, and less destructive.

Here’s how:

• Lower the voter-approval rate to 0%. Any increase in property tax revenue must be approved by voters.
• Require votes on uniform election dates—no more low-turnout sneak attacks.
• Eliminate exemptions and disaster carveouts—no more backdoor tax hikes.
• Impose firm local spending limits to control growth and protect relief.
• Use state surpluses to eliminate school district M&O taxes, and urge localities to follow suit.

I’ve spent decades analyzing this issue because I lived the stakes. Raised in South Houston by a single mom, we struggled to make ends meet. I know what it means to crave stability, to want to own something, to build a future that’s secure. That’s why I fight for this—not because it’s popular, but because it’s right.

Texans deserve to own their homes—not lease them indefinitely from local governments. They deserve a system that rewards responsibility, not one that punishes success.

SB9 may be a step. But if it’s the only step, it’s a misstep. Let’s do what Texans elected their leaders to do: return power to the people, cut taxes permanently, and restore the promise of property ownership.

Let Texans own their homes—completely.

Originally posted on Substack.

President Trump’s permanent tax reforms in the “One Big Beautiful Bill” marked a key step toward American economic prosperity. Yet, an essential follow-up remains: indexing capital gains taxes to inflation. This reform aligns not only with economic efficiency but also with fiscal responsibility and free-market principles.

Under current law, capital gains are taxed based on nominal returns rather than real, inflation-adjusted gains. Consider a middle-class investor who bought $100 in stocks at the start of President Biden’s term and sold them four years later for $122. While inflation during this period totaled roughly 22%, the investor faces capital gains taxes on the nominal $22 "profit," despite no real gain in purchasing power. This represents a hidden inflation tax, distorting actual economic gains.

Historically, periods of high inflation—such as the 1970s or the recent Biden-era inflation—illustrate how the capital gains tax can exceed effective rates of 50% or even surpass 100%, taxing phantom gains and sometimes resulting in taxes owed despite actual economic losses. Ending this punitive taxation promotes economic soundness and accurate fiscal measurement.

The Congressional Research Service highlights the current distortion clearly: capital gains are disproportionately affected by inflation compared to other forms of income due to their deferred nature. Although long-term assets benefit from deferrals and step-up basis provisions, short-term holdings disproportionately suffer, penalizing investors who allocate capital efficiently. Indexing capital gains for inflation rectifies this imbalance, enabling taxes to reflect genuine economic returns rather than artificial price increases.

Critics argue that indexing introduces complexity and could distort the tax code if other income forms—like interest and depreciation—remain unindexed. However, modern financial software and clear regulatory frameworks can mitigate these concerns, making inflation adjustments practical and manageable. The economic logic remains compelling: indexing capital gains ensures accurate taxation of real returns, not artificial, inflation-driven increases.

Economic benefits of indexing, even if modest, compound significantly. The 2018 Tax Foundation estimates that indexing would boost GDP by 0.11%, raise wages by 0.08%, and create roughly 21,800 jobs. More critically, indexing reduces the “lock-in effect,” where investors delay asset sales solely to avoid punitive taxation. Eliminating this distortion would release billions in capital to fuel entrepreneurial ventures and small businesses—engines of sustainable economic growth.

Beyond those near-term effects, indexing would also generate dynamic long-term benefits by lowering the effective tax burden on capital, thus increasing the after-tax return on investment. As capital becomes more mobile and profitable, asset values would likely rise, rewarding savers and improving household balance sheets. This appreciation would enhance long-term financial security, giving families greater ability to save, invest, and leave a legacy to future generations. In this way, indexing capital gains isn’t just pro-growth—it’s pro-legacy, fostering a culture of ownership and intergenerational prosperity.

Some caution, indexing could lead to less tax revenue in the short run. Yet historical data indicate that lower capital gains tax rates often prompt increased asset turnover, partially offsetting projected losses in a dynamic economy. Crucially, the real issue isn’t revenue shortfall—it's excessive federal spending. Fiscal responsibility demands disciplined spending policies rather than continuously seeking new revenue streams.

Stephen Moore points out that lower capital gains taxes can increase revenue by unlocking trillions of dollars in held capital. IRS data reveals that two-thirds of capital gains tax returns come from households earning under $200,000 annually, underscoring that indexing broadly benefits ordinary Americans. Certain types of capital gains—such as those from retirement savings, small business shares, farmland, and long-held real estate—would be well served by indexing, as they are more likely to reflect inflationary gains over time.

Indexing capital gains is not about fairness per se—it's about accurate fiscal policy and economic efficiency. Taxing unrealized, inflation-driven appreciation as income contradicts fundamental free-market principles. President Trump can—and should—take decisive action. Even if legally challenged, his action would spotlight a commitment to responsible fiscal policy. However, Congress should not wait. Lawmakers should enact indexing through legislation to ensure long-term stability, clarity, and legitimacy of the tax code.

Ultimately, indexing capital gains taxes to inflation isn't merely pro-growth; it's fiscally responsible and economically sound. Coupled with meaningful spending restraint, it represents the exact kind of policy reform needed for long-term American prosperity.