Report Reveals New Trend of Blue States Cutting Taxes; Red States Still Lead in Tax Competitiveness

Report Reveals New Trend of Blue States Cutting Taxes; Red States Still Lead in Tax Competitiveness

Report Identifies National State Policy Trends and Predicts 2015 Policy Landscape

Arlington, VA (August 14, 2014)—A new trend is emerging in which traditionally blue states are implementing pro-growth tax reforms, according to the American Legislative Exchange Council Rich States, Poor States report. Red states still lead in tax competitiveness, but blue states are starting to create more competitive economies, according to the report.

The final installment of the report, released today, complements the state economic outlook rankings released in April. Written by Arthur B. Laffer, Stephen Moore and Jonathan Williams, the report deciphers which policies support economic growth, reveals which states are enacting major reforms and predicts what may be in store for 2015.

Report themes include:

  • A spotlight on a new trend: traditionally blue states are cutting taxes. The report specifically highlights tax reforms initiated by Illinois, Maryland, New Jersey, New York and Rhode Island.
  • An analysis of recent notable state policy actions. Many major state actions are highlighted, such as North Carolina and Missouri’s tax cuts, the failure of Colorado’s Amendment 66, Minnesota’s tax hike and Virginia’s transportation funding package. Six states are also highlighted for raising the minimum wage.
  • A focus on people, and congressional seats, moving out of the Northeast. Taxpayer migration data from the U.S. Census Bureau shows that millions of taxpayers are moving out of Northeastern states, which affects congressional apportionment. According to the report, in the 1950s, the Northeastern states had 141 House seats. By 2010, Northeastern states had only 85 seats in the House of Representatives.
  • A prediction for 2015 on which states will cut taxes and which states will raise them. Nebraska, Oklahoma, Missouri, Arizona, Tennessee, Michigan and Georgia are expected to make pro-growth reforms, while Maryland and Illinois and predicted to raise taxes.
  • An explanation of why certain economic development policies succeed or fail. Included are the effects of minimum wage laws, death taxes and tax burdens on state populations.

“We are starting to see blue states follow the red state trend of tax reform,” said Jonathan Williams, director of the American Legislation Exchange Council Center for State Fiscal Reform and co-author of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. “Tax reform is a non-partisan issue and is now widely acknowledged as necessary for fostering economic growth.”

The Rich States, Poor States state economic outlook ranking was released on April 15 and ranked state economic outlook based on 15 equally weighted policy variables. This year, Utah ranked first in economic competitiveness while New York ranked last.

To download a copy of Rich States, Poor States and to see individual state data, visit www.alec.org/rsps

Contact: Molly Fuhs
mfuhs@alec.org
202-870-1603                 

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The American Legislative Exchange Council is the largest nonpartisan, voluntary membership organization of state legislators in the United States. The Council is governed by state legislators who comprise the Board of Directors and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think tank members. For more information about the American Legislative Exchange Council, please visit: www.alec.org.