American Legislative Exchange Council
While discussing his motivation for lowering state income taxes, Mississippi Speaker of the House Philip Gunn explained, “There is just no downside to putting money back into the pockets of people.”
It’s hard to argue with that.
Despite the gridlock in our nation’s capital, there is hope across the 50 states for policies that create opportunity for all. The annual report, Rich States, Poor States, includes many examples of states that are getting it right.
For 16 years, the American Legislative Exchange Council has partnered with famed economists Dr. Arthur Laffer and Stephen Moore to produce Rich States, Poor States, an in-depth analysis of each state’s economic outlook and performance. The study is a compelling resource for elected leaders deciding whether to embrace policies that increase the size of government or policies that encourage job creation and allow people to keep more of their hard-earned paychecks.
As the nation’s largest nonpartisan organization of state legislators dedicated to limited government, free markets, and federalism, ALEC understands and celebrates the role state legislators play when it comes to improving the economic outcomes in their states.
But policymakers are not alone in understanding the value of the report. Entrepreneurs and job creators, for example, regularly use the analysis to identify which states offer the best foundation when starting or moving a business.
Thanks to a pro-taxpayer approach to policymaking, Utah takes the number one ranking in economic outlook for the 16th straight year, with North Carolina and Arizona rounding out the leaderboard for second and third, respectively. All three states boast flat personal income taxes, with rates lower than most states and a recent track record of aggressively reducing tax burdens. As a result, their economies and populations are growing.
Three of the most improved states in the latest rankings were Kentucky, Virginia and Mississippi. Kentucky improved seven spots to 27th overall thanks to its switch to a flat personal income tax in 2019 and commitment to cutting rates in recent years. Virginia is in the midst of an economic comeback, cutting taxes in the 2022 legislative session and climbing an impressive six spots to 18th overall for economic outlook. Under the leadership of Speaker Philip Gunn, Mississippi improved five spots, after passing a flat tax and enacting the largest tax cuts in state history last year.
It comes as no surprise that New York, with its crippling tax rates, overspending, and burdensome regulations, once again claims the dubious distinction of ranking dead last. Rich States, Poor States notes that the Empire State lost more than 1.7 million residents in the past decade – and more than 300,000 in the past year alone.
New York is joined near the bottom of the rankings by states like California, Illinois and New Jersey that have also experienced a population exodus in recent years. It’s no coincidence that those states impose some of the highest income and property taxes on their residents and regularly rank at the bottom of Rich States, Poor States. Bad policy decisions have consequences.
As report co-author Stephen Moore said, “The action in America is the state capitals. A freedom movement has been unleashed because of Rich States, Poor States. And states are seeing the migration of people, jobs and capital when they get it right.”
Let’s hope this movement continues to spread across the states – our 50 laboratories of democracy. While the tax-and-spend crowd in Washington, DC pushes bigger government, states that promote economic growth through lower taxes, responsible budgeting, and pro-worker policies will continue to thrive.
Through Alveda King Ministries, Dr. Alveda King shares a message of truth and unity: We are one blood and one human race. Economic freedom, religious freedom and educational freedom will flourish when we accept this truth. Dr. King’s hope for America is rooted in the King family legacy. She smiles at the future of America and believes when peripherals collide, convergence is imminent.
Jonathan Williams is the chief economist and executive vice president of policy at the American Legislative Exchange Council, where he works with state policymakers, congressional leaders and members of the private sector to develop fiscal policy solutions for the states. Williams founded the ALEC Center for State Fiscal Reform in 2011 and co-authors Rich States, Poor States: ALEC-Laffer Economic State Competitiveness Index with Reagan economist Dr. Arthur Laffer and Stephen Moore.