New York Governor Paterson lamented the loss of state tax revenue as a result of top Wall Street CEOs getting much lower bonuses as a result of their crappy performance and the taxpayer payout. He noted a $180 million drop in revenue just because of lower bonuses.

I assume this does not include the lower revenue from declines in other business profits. Jindal in Louisiana and Palin in Alaska face revenue shortfalls due to declining oil volume. Unlike the Federal Government the states can not print money and the credit markets are not particularly friendly to their borrowing either.

Economic policy such as higher taxes and more regulation that suffocates business growth is self defeating. The decline in tax revenue quickly undoes any tax benefit and starves the public sector.

A profit producing business is one of the best public goods we can have. We should be encouraging them.