Florida continues to improve, ranks 9th most economic competitive state
Today, ALEC released their 6th annual Rich States, Poor States – an analysis of policies that “lead states to economic prosperity and policies that states should avoid.” AFP-FL loves to use this index because it looks at specific policies and the effects of those policies. We were lucky to have one of the report’s authors, Jonathan Williams, join us at our 2013 Tallahassee Days and give a great presentation about the good, bad and ugly of state economic policy.
One of the key take-aways from this report is that, despite what progressives continue to perpetuate, there is no doubt that low- or no-tax states outperform states with higher taxes.
The proof – the nine state with no income tax had higher than average population growth (15% vs 9.5% for all states), higher job growth (12.7% vs 7.6%), higher gross-state-product (63.5% vs 51.4%) and dramatically higher state and local tax revenue (76.3% vs 49.8%). But wait, how can that be? States with no income tax actually bring in more taxes? Well common sense proves to be actually be true – if you tax people less they have more money to spend and invest which means more tax revenue being generated. In fact, one of President Obama’s former economic advisors found that every one percent increase in taxes led to a two-to-three decrease in real GDP. Cue big-government, pro-tax politicians’ heads exploding…
Florida, largely due to our lack of a state income tax, always falls at the upper end of the Rich States, Poor States index. This year we actually jumped a couple spots, to 9th best economic outlook, compared to 13th best in 2012. Why aren’t we higher on the list? Because we actually have some pretty hefty tax burdens from other sources, and because of this our ranking is lowered. In fact, our neighbor to the north, Georgia, is ranked 8th on economic outlook despite having a personal income tax because their other burdens are lower. This means that, although Florida is doing great, we have some room for improvement if we want to be number one, or even in the top five.
Room for improvement:
- Florida ranks 37th most competitive for Property Tax burden (the lower the rank the higher your burden is, so to flip it around we have the 14th highest property tax burden)
- Florida has the 39th most competitive Sales Tax burden (or 12th highest)
- Our remaining tax burden ranks us at 40th best (or 11th worst)
- And we rank 39th for minimum wage (12th highest in the US)
Here are the 15 measures that are used to determine the ALEC-Laffer Economic Competitiveness Index:
- Highest marginal personal income tax rate
- Highest marginal corporate income tax rate
- Property tax burden
- Sales tax burden
- Tax burden from all remaining taxes
- Estate/Inheritance tax
- Recently legislated tax policy changes (over past two years)
- Debt service as a share of tax revenue
- Public employees per 1,000 residents
- Quality of state legal system
- Workers’ compensation costs
- State minimum wage
- Right-to-work state (yes or no)
- Tax or expenditure limits
Take some time to read ALEC’s Rich States, Poor States. It is chock-full of valuable information. We’d encourage you to ask your state and local elected officials to read it too!