Tax Reform

Key Points
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Key Points
  • A vibrant, growing economy allows businesses and households to flourish.
  • A state’s economic vitality starts with a principled tax code that is fair, transparent and competitive relative to other states.
  • Over the past decade, the nine states without a personal income tax have consistently outperformed the nine states with the highest taxes on personal income – in job creation, population growth and even tax revenues.
  • With the right set of policies in place, lower-tax states can attract much-needed human and financial capital from higher-tax states that penalize wealth creation. 

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish.

A dynamic state economy starts with a principled tax code. As noted in the ALEC Principles of Taxation, state tax codes should be fair, transparent and economically neutral. Low, competitive tax rates on a broad tax base offer a level playing field to all. In this environment, more residents will benefit from greater economic growth.

The advantages of a low-tax environment are clear. Over the past decade, the nine states without a personal income tax have consistently outperformed the nine states with the highest taxes on personal income. Similarly, those states with no income tax saw their population rise 109 percent faster than their high-tax counterparts. In those same ten years, job growth in states with no income tax increased 130 percent faster versus the states with the highest income taxes. Even state and local tax revenues in the nine states without income taxes grew 51 percent faster. While other factors have surely played a role, these general trends held true decade after decade for the past half-century.

As the research overwhelmingly shows, competitive tax and fiscal policies are vital to a state’s future. With the right set of policies in place, lower-tax states can attract much-needed human and financial capital from higher-tax states that penalize wealth creation.

Articles

In the News

States are the Secret Weapon in the Federal Tax Debate: Jonathan Williams on The Hugh Hewitt Show

Jonathan Williams/June 24, 2025
Tax Reform

The Ten Golden Rules of Taxation: Jonathan Williams on American Radio Journal

Tax Reform

Rich States Poor States Turns Eighteen: Across the States Special Edition

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Publications

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Model Policies

  • State Constitutional Amendment To Oppose New State Taxes, Increased Spending, and Debt Without Voter Approval Draft

    WHEREAS, States through their respective constitutional amendment processes should adopt fiscal responsibility amendments that (I) impose limits on the amount of money government can tax and spend, (II) tie the growth of state revenue to a rate of population growth plus inflation, and (III) require any increases above an established…

  • Resolution Recognizing The Seriousness Of The National Debt And Its Threat To National Security Draft

    WHEREAS, In March 2025, the outstanding public debt of the U.S. totaled more than $36 trillion, with public debt equaling 124 percent of gross domestic product and the debt owed per citizen rising to $107,000; WHEREAS, More than $8 trillion of the federal debt is owned by individuals not located…

  • Health Care Sharing Ministries Tax Parity Act Draft

    Section 1. Short Title. This Act shall be known as the “Health Care Sharing Ministries Tax Parity Act.” Section 2. Definitions. As used in this Act, the following definitions apply: (A) “Health care sharing ministry” has the meaning set forth in {insert existing state code} {Drafting Note: The following language…

  • Taxpayer Transparency Act Final

    Be it enacted by the Legislature of the [COUNTY] as follows: Section I. [Chapter] of the Code of [COUNTY] is hereby added as provided hereinafter: TAXPAYER TRANSPARENCY 1 Title. 2 Legislative intent. 3 Definitions. 4 Searchable budget database website created. 5 Updates. 6 Compliance with Act. 7 Electronic public access…

  • Local Taxpayer Protection Act Final

    Be it enacted by the Legislature of [COUNTY] as follows: Section 1. Local Taxpayer Protection Act. (A) Should the annual operating budget result in an increase in property tax levy, adoption by the Legislature shall require a vote of two-thirds of the total Legislature. (B) The…

  • Taxpayer Receipt Act Final

    SECTION 1. DEFINITIONS “Department” means the Department of Management and Budget, Department of Revenue, or the Office of State Policy and Budget (depending on the state). “Major state taxes” means income, sales, alcohol, tobacco, and motor vehicle fuels tax. SECTION 2. TAXPAYER RECEIPT. (a) The department shall develop…

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Task Forces

Tax and Fiscal Policy

The ALEC Tax and Fiscal Policy Task Force is dedicated to researching and promoting sound policy…

Press Releases

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