In releasing the third edition of Rich States, Poor States, a press release from the American Legislative Exchange Council (ALEC) points outs:
“As states face their toughest budgetary climates in a generation, the authors of a new report . . . point out what states should do to alleviate the fiscal pain, and also what they should avoid, (and) shows how many states responded to the economic crisis with higher taxes, new spending, and more debt. Instead of continuing down this road to a financial meltdown, the authors outline the steps states can take to bring about economic recovery.”
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“The correlation between poor policy and poor economic results is indisputable, just look at California, New Jersey, and New York,” Williams said. “Our research shows that states with responsible spending and competitive tax rates enjoy the best economic outlook. States do not enact changes in a vacuum – every time they increase the cost of doing business in their state, their state brand immediately loses value.”
The study by famed economist Dr. Arthur B. Laffer, senior economics writer at the Wall Street Journal Stephen Moore, and Jonathan Williams of ALEC’s Tax and Fiscal Policy Task Force, “ shows that states with responsible spending and competitive tax rates enjoy the best economic outlook. States do not enact changes in a vacuum – every time they increase the cost of doing business in their state, their state brand immediately loses value.” The top and bottom five states were:
Top Five States Bottom Five States
1. Utah 46. California
2. Colorado 47. Illinois
3. Arizona 48. New Jersey
4. South Dakota 49. Vermont
5. Florida 50. New York
Virginia fares well in this latest edition of Rich States, Poor States, ranking 4th in economic performance, including 12th on growth in personal income per capita, 12th in domestic migration, and 16th non-farm payroll employment growth. Virginia also ranked 8th in economic outlook.based on such factors as top marginal tax rate, sales tax burden, debt service as a share of tax revenue, state minimum wage, and Virginia as a right-to-work state.
In closing, let me cite John Stephenson’s comments about the research study (he also gets the HT) at the National Taxpayers Union blog, Government Bytes:
“What strikes me about this list is that the states that are ranked the highest are ones that have either undertaken real budget and tax reforms over the last several years or have limited tax burdens. In Colorado, the state has spending and tax limitation provisions in its constitution. Florida, Wyoming, South Dakota, and Tennessee all have no personal income tax. Meanwhile, the states that rank the lowest, including New Jersey, New York, and California, have some of the highest tax burdens and spend the most in the nation.
"Rich States, Poor States" also looks at the impact that the "stimulus" from Washington is having on the states. The impact is not good because states are using the stimulus as if it were found money to budget for programs they cannot afford over the long term. This should serve as a warning to the politicians in Washington who think we can spend our way out of problems instead of reforming policies to promote economic activity, job growth, and prosperity.
“Of course, the report is not all negative. In fact, the report spends an entire chapter discussing Missouri and the good policies it is pursuing. There is an effort underway in the Show Me State to reform the tax code to make it simpler, fairer, and more competitive. It is worthwhile to read about Missouri and its effort is a story we should all follow closely in the months ahead.”