The Connecticut gubernatorial race is getting interesting. Political outsider and experienced businessman Bob Stefanowski is running as a candidate for the GOP on the platform of abolishing the state income tax.

That may sound like an outlandish and unrealistic goal to many, but as recently as 1991 Connecticut had no income tax and it was among the richest and most well-run states in the union.

Then the “tax and spend” Democrats took over. Today Connecticut is one of the worst off states financially with a declining population and deteriorating infrastructure, according to Stefanowski.

The Laffer Curve

Stefanowski claims he can do something about Connecticut’s financial woes by going back to the policies of the olden days, an idea that is getting “big league” support from the legendary economic advisor to Presidents Ronald Reagan and Donald Trump, Arthur Laffer. Laffer told Fox News:

“I’ve never seen a gubernatorial candidate, let alone a governor, who has the abilities and the skills that Bob does to effectuate real change… This guy knows how to fix the plumbing as well as run the company.”

The Trump advisor is known for the so-called Laffer curve, which roughly speaking states that there is an optimal tax rate that maximizes revenues. Beyond that point, overall income is reduced.

Trump’s Influence

Bob Stefanowski

Stefanowski has a radically different personal style from President Trump. Nevertheless, he is riding the Trumpian wave by promoting himself as a business-savvy outsider. In a study conducted by McLaughlin & Assoc., 53% of Connecticut voters wanted an outsider, whereas only 28% wanted a career politician as their next governor.

As such, he is positioning himself as a more palatable version of Trump who can appeal to a traditionally left-leaning voter base. He is also helped by the fact that the current Democrat governor Dannel Malloy is highly unpopular.

What About Inequality?

Stefanowski surely has a chance to convert some of the Reaganite Democrats. They are mostly concerned with their wallet and want better roads and public services. If they can achieve those goals from a business-savvy Republican who knows how to run things, why not vote for him?

Far more difficult is to change the minds of the deep blue leftists. They are not concerned about wealth per se, but about inequality. They generally believe that the progressive tax is the best way to level the playing field. This type of voter would gladly sacrifice economic growth for equality of outcome.

Fortunately, there exists a convincing argument for this voter base too. Statistics compiled from across the world show that there is a weak negative correlation between economic freedom – including low taxes – and inequality.

This data, analyzed in The Atlantic, illustrates that many different factors cause inequality, but economic politics have almost no effect. In fact, lower taxes and fewer regulations reduce overall inequality slightly.

Why is this the case? Think of taxes and regulations as hurdles. Big, powerful corporations and wealthy individuals can afford to do so-called “tax planning”, siphoning their income across the globe into tax havens and making use of loopholes. Joe the plumber can’t do that and so the small businesses and mom and pop stores tend to lose out in the competition, creating greater inequality between the haves and have-nots. That’s why big corporations love the swamp of government intervention.

Somewhat counterintuitively, lower taxes and less red tape enables more people to compete, which reduces the gap between rich and poor. If Stefanowski can bring that message to the fore during the Connecticut election, he might have a chance to make inroads in a traditionally blue state.

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