Rich States, Poor States Index Ranks Utah, Texas First For Economic Outlook, Performance

By Bethany Blankley | The Center Square

The Center Square – Utah and Texas ranked first in separate economic categories in a new report published by the nonpartisan American Legislative Exchange Council (ALEC).

In its 13th annual Rich States, Poor States Index, ALEC identified states with the best economic outlook in 2020 and policy choices that have encouraged or stymied economic opportunity and growth.

The report provides an analysis of all 50 states in two categories: economic outlook and economic performance across multiple variables.

Utah has ranked first in economic outlook since 2013. Texas has ranked in the top 15 in economic performance since 2013 but ranked first for the first time in this year’s report.

Used by state lawmakers since 2008, the report is authored by economist Dr. Arthur B. Laffer, economic policy expert Stephen Moore, and ALEC’s chief economist, Jonathan Williams.

The data show “how economically competitive states thrive and how those that don’t make proactive pro-growth reforms, like Connecticut and Illinois, are left in the dust,” Dr. Arthur Laffer said. “Sound tax policy and eliminating excessive government regulations continue to stand strong and true in improving states’ competitiveness, and we hope these states’ stories serve as a guide as we navigate the economic recovery following the COVID-19 pandemic.”

Its economic outlook category provides a forward-looking forecast based on the state’s standing in 15 state policy variables. Data reflect state and local tax rates and revenues and any effect of federal deductibility.

Those in the top following Utah, include Wyoming, Idaho, Indiana, North Carolina, Nevada, Florida and Arizona. Texas ranked 15th.

“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 states.

In the economic performance category, Texas ranked first. States in the top 10 also included Washington, Utah, Colorado, North Dakota, Florida, South Carolina, Oregon, and Tennessee.

New York ranked last; New Jersey ranked 48th.

Its economic performance analysis provides a backward-looking measure based on the state’s performance in three performance variables influenced by state policy: state GDP, absolute domestic migration, and non-farm payroll employment. The ranking also details states’ individual performances over the past 10 years based on this economic data.

“Across the states and over the years, Rich States, Poor States showcases the positive impact of free market, pro-growth policies on state economies,” ALEC’s chief economist and report co-author, Jonathan Williams, said. “Following months of COVID-19 uncertainty, taxpayers and their legislators need choices that promote stability and are proven to build stronger and more resilient states. This publication provides a roadmap to recovery based on fiscally sound choices.”

The authors found that “big reforms” significantly helped Wyoming, Oklahoma, Wisconsin, Delaware, and Montana.