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CEA projects 16–19% rise in new business startups per state after income-tax elimination

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The CEA's published analysis reports a 16 to 19 percent increase in new startups for the average state under the modeled reform scenarios.

Source summary
A White House (CEA) research paper examines the economic effects and feasibility of states phasing out personal income taxes. It models two scenarios—full revenue replacement through broadening the sales tax, and replacement combined with limits on spending growth—and reports state-by-state impacts on GDP, wages, startup formation, and high-income migration. The CEA finds average gains such as a 1–1.6% rise in state GDP, 16–19% more startups, a $4,000 increase in average wages, and estimated average state sales tax requirements of under 8% (or 6.2% with spending limits).
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Latest fact check

The White House publication of the Council of Economic Advisers (CEA) titled "The Economic Impact of State Income Tax Elimination" (Jan. 28, 2026) lists under its key findings "A 16 to 19 percent increase in new startups for the average state." The same bullet appears in the downloadable PDF report on whitehouse.gov. Verdict: True — the CEA analysis as published by the White House explicitly reports a 16–19% increase in new startups for the average state under the studied scenarios.

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Timeline

  1. Update · Jan 29, 2026, 01:49 AMTrue
    The White House publication of the Council of Economic Advisers (CEA) titled "The Economic Impact of State Income Tax Elimination" (Jan. 28, 2026) lists under its key findings "A 16 to 19 percent increase in new startups for the average state." The same bullet appears in the downloadable PDF report on whitehouse.gov. Verdict: True — the CEA analysis as published by the White House explicitly reports a 16–19% increase in new startups for the average state under the studied scenarios.
  2. Original article · Jan 28, 2026
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