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.

Publications

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Model Policies

  • Resolution Urging Congress to Cut the Federal Corporate Tax Rate Sunset Review

    Summary This resolution encourages Congress to cut the 35 percent federal corporate tax rate in order to improve the ability of the 50 U.S. states to compete for investment and jobs in the global economy. Resolution WHEREAS, the combined United States average federal-state corporate income tax rate is over 39 percent, …

  • An Act Relating to Online Lodging Marketplaces – Establishing Statewide Standards, Protecting Privacy, and Enabling Efficient Tax Remittance Final

    Section 1 – Definitions “Lodging Marketplace” means a person that provides a platform through which an Unaffiliated Third Party offers to rent a Vacation Rental or Short-Term Rental to an occupant and collects the consideration for the rental from the occupant. For the purposes of this paragraph: “Unaffiliated Third Party” …

  • Uniform Standard for Lodging Taxes Act Final

    Section 1.  Definitions [Appropriately designated section number] of the statutes is created to read: (1) “Hotel” means any structure or space, or any portion thereof, that: (a)  Is occupied, or intended or designed for occupancy, by transients for dwelling, lodging, or sleeping purposes; and (b)  Accepts on-site reservations for accommodations; …

  • Proclamation Recognizing Tax Freedom Day Draft

    Whereas, Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden, and Whereas, Americans will collectively spend more on taxes in [Insert Current Year] than they will on food, …

  • An Ordinance to Repeal Personal Property Tax Collection Draft

    WHEREAS, Ordinance No. [Insert number], passed on [Insert date], established personal property tax collection in [Insert Jurisdiction], and WHEREAS, the [Insert State] [insert state statute] has given [Insert Jurisdiction] the option not collect personal property taxes, and WHEREAS, personal property taxes make it impossible for businesses and citizens to own …

  • Resolution in Favor of Tangible Personal Property Tax Repeal Final

    WHEREAS, personal property taxes are ad valorem taxes on all property other than real property (i.e., property that is unaffixed or movable); and WHEREAS, though the name suggests that personal property taxes are paid by individuals, the majority of the tax liability falls on business due to the broad exemptions …

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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 economic policy aimed at creating …

Press Releases

  • New Report Analyzes Governors’ Economic Policy Proposals image

    New Report Analyzes Governors’ Economic Policy Proposals

    FOR IMMEDIATE RELEASE Contact: Taylor McCarty [email protected] 734-752-5646 New Report Analyzes Governors’ Economic Policy Proposals State of the State addresses reveal free market …

  • Annual Report Highlights Nine States That Cut Taxes in 2016 image

    Annual Report Highlights Nine States That Cut Taxes in 2016

    For Immediate Release Contact: Taylor McCarty [email protected] 202-309-1274 Arlington, VA (March 1, 2017)—Nine states substantially cut taxes in the 2016 legislative session, according to a …

  • 2016 State Economic Competitiveness Index Reveals National Pro-Growth Trend image

    2016 State Economic Competitiveness Index Reveals National Pro-Growth Trend

    North Carolina, North Dakota, Wyoming and Arizona among top states; New York, Vermont, New Jersey, Connecticut and California rank last

  • New Report Highlights 17 States That Cut Taxes in 2015 image

    New Report Highlights 17 States That Cut Taxes in 2015

    Seventeen states cut taxes in the 2015 legislative year, matching a high-water mark that was first reached in 2013, according to a new report by the Center for State Fiscal Reform at the American Legislative Exchange Council (ALEC).

  • NFIB: Report Confirms 2012 Tax Cuts Put Kansas Back on Track image

    NFIB: Report Confirms 2012 Tax Cuts Put Kansas Back on Track

    TOPEKA, Jan. 21, 2016–Dan Murray, state director of the National Federation of Independent Business, released the following statement today in response to strong showing by Kansas in the 8th edition …

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