Report: Low-Tax States Grow At Faster Pace Than High-Tax States

Casey Harper (The Center Square).

The report, which examines both the economic and tax climate in all fifty states, has just been released. Utah is ranked first while New York comes in second.

It Report, released by the American Legislative Exchange Council (ALEC), says that “cutting taxes, paying down debt and maintaining free market policies have significantly helped states attract new residents.”

“Americans continue to vote with their feet toward states that have lower tax burdens and value economic competitiveness,” said Jonathan Williams, ALEC Chief Economist and Executive VP of Policy. “Rich States, Poor States teaches us that states with lower taxes, especially those that avoid personal income taxes, have seen significantly better rates of in-migration than states with high income tax rates.”

Based on several variables such as tax burden, legal system, minimum wage, government size, role of labor unions and public debt, the report gave a ranking to the state’s economic outlook.

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“Generally speaking, states that spend less – especially on income transfer programs – and states that tax less – particularly on productive activities such as working or investing – experience higher growth rates than states that tax and spend more,” the report said.

Utah’s personal income tax is flat topped this list. North Carolina followed closely by Arizona, Oklahoma, Idaho, and North Carolina. Following that Nevada, Indiana. Florida. North Dakota. and Wyoming occupied the 6-10 positions, respectively.

“If you believe incentives matter, and I do, state policies have the effect of changing those incentives at both the state and local levels,” economist Arthur Laffer said. “Those changes in incentives have consequences. This method of ranking states is tried and true. I think it is a great way of picking winners and giving guidance on how states should be effectively governed.”

New York came in at the bottom, New Jersey was 49th and California 48th. It ranked Vermont at 47th place, Minnesota at 46th and Illinois at 45th. Maine was 44th, Hawaii at 43rd, Maryland at 42nd and Oregon at 41st.

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“This study has had a big impact on what state officials, governors and legislators are doing,” economic expert Stephen Moore said. “This is a magic moment for tax reform at the state level. I think even in some of these blue states that have been traditionally very liberal, they’re looking at reforms that could really make their states more prosperous. I think the direction is good, and I think a lot of that direction is a result of the Rich State, Poor State rankings.”

The Center Square permission granted this syndicated version.