ALEC’s “Rich States, Poor States” Reaffirms What Works

April 15, 2014

By Akash Chougule

Just in time for Tax Day, the American Legislative Exchange Council today released their annual “Rich States, Poor States” report examining the latest trends in state economic growth. Renowned economists Arthur Laffer, Stephen Moore, and Jonathan Williams take into account tax rates, regulatory burdens, labor policy, and more in assessing and ranking the fifty states by overall economic competitiveness.

The latest edition of Rich States, Poor States largely reaffirmed what we already know: economic freedom works. The most competitive, most prosperous states continue to be those that unchain their economy  – and states making the biggest improvements are the ones taking the boldest steps.

For the seventh year in a row, Utah ranked number one for overall state economic outlook. Utah’s low-tax, minimally regulated, Right to Work conditions make it a haven for businesses to start, grow, and hire. As a result, both state GDP and payroll employment are among the best in the country. While much of the nation struggles through the malaise of a lethargic economic recovery, prosperity is not hard to come by in the Beehive State. Other states in the top five for economic outlook include South Dakota, Indiana, North Dakota, and Idaho.

For state economic performance, Texas ranked number one, followed by Utah, Wyoming, North Dakota, and Montana. The highest ranking, best-performing states in ALEC’s report have several characteristics in common – not only are they low-tax Right to Work states, but they have allowed the energy boom to create thousands of new businesses, jobs, and prosperity. Even liberal critics are quick to point to the energy boom as the reason millions of Americans are flocking to states like Texas and North Dakota – but those same liberals are pushing policies that dampen the massive economic growth potential that the energy industry holds. The ALEC report confirms that it is both the energy boom and the business environment that are making economically free states successful – and both are dependent on good state policy.

While Texas, Utah, and the Dakotas have dominated these lists for years, a few states made massive gains in the rankings this year. North Carolina’s historic tax cuts helped them move from 22nd to 6th. Similarly, Indiana’s tax cuts and move to become a Right to Work state moved them from 14th to 3rd, and Michigan becoming a Right to Work state moved them from 20th to 12th. These numbers mean more than rankings on a list – they mean more jobs, more freedom, and more families being able to keep more of what they earn.

On the flip side, high-tax, big government states like Rhode Island, California, Illinois, and New York continue to flounder. Families, businesses, and tax revenue are leaving these states in droves for greener pastures, leaving behind high unemployment, lack of worker freedom, empty storefronts, and unsustainable government spending.

ALEC’s “Rich States, Poor States” is yet another indication that limited government economic policy works. While President Obama’s big spending, big government agenda has proven to be a failure time and time again, many entrepreneurial governors and state legislatures are moving in a more positive, freer direction – and millions of people are responding to the prospect of well-being in these states by voting with their feet.

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