Tax Reform

Eighth Rich States, Poor States Report Shows Americans Fleeing High-Tax States

The balance of economic and political power is shifting in America. According to the Center for State Fiscal Reform’s new Rich States, Poor States report, Americans are fleeing high-tax and regulatory states and heading to low-tax states with friendlier business environments by the millions. The reason for this is simple: Americans continue to vote with their feet and go where they have the best economic opportunities.

In the eighth edition of Rich States, Poor States, authors Arthur Laffer, Stephen Moore and Jonathan Williams discuss this important trend in America and which policies are leading states to become magnets for new residents and jobs. Simply put, free market fiscal policies continue to drive competitiveness across the states. In contrast, the “tax and spend” method, like the 11 obstacles to growth outlined in this edition, has been tried and has consistently failed. This edition of Rich States, Poor States shares information policymakers can use to avoid these obstacles and set their states up to be economic winners in the competition for people, jobs and capital.

In addition to describing the best tax and fiscal policy solutions for states, Rich States, Poor States, also includes a review of the significant economic policy developments that have occurred in the last year in the wake of the 2014 elections. For the most part, pro-growth economic reforms are gaining momentum throughout the states, and it is encouraging to see leaders from both sides of the aisle take Rich States, Poor States research and call for reform. As Arizona Governor Doug Ducey writes in this year’s foreword:

“Governing on many of the economic policy principles advocated in Rich States, Poor States has led our state on a path to prosperity. The work done by Arthur Laffer, Stephen Moore and Jonathan Williams is second to none. There is always more work to be done, but I am confident that these priorities to rein in government spending, reduce regulations on business, keep taxes low for Arizonans and right the state’s fiscal ship have combined to significantly improve Arizona’s economic future.”

This report also features a comprehensive “State of the States” analysis, highlighting the most notable changes in state fiscal policy in the last year. Many states are pursuing admirable pro-growth policies, but others still believe raising taxes and increased government spending will lead them to prosperity.

The eighth edition also includes an update on tax cronyism in the states. Laffer, Moore and Williams take on this widespread problem, explaining that tax cronyism is a poor substitute for pro-growth tax reform. Not only does tax cronyism fail to create real economic opportunity, but it also gives rise to corruption and stifles innovation. The authors offer important strategies for implementing fair and effective tax reform that reduces or eliminates crony tax policies and explain that pro-growth tax policy, which avoids picking winners and losers, provides a fair and competitive environment for all hardworking taxpayers.

Finally, the authors devote an entire chapter of the report to an in-depth look at the much-discussed tax reform in Kansas, which has been under fire from Left-leaning pundits. The Sunflower State’s experience should be instructive. As co-author Jonathan Williams, Vice President of the American Legislative Exchange Council’s Center for State Fiscal Reform, recently said, “The Kansas tax reforms are far from the abject failure that some would suggest. In the long term, if coupled with appropriate spending reform, the much-maligned tax cuts will yield positive results for the hardworking taxpayers of Kansas.”

One of the key takeaways from the work of Laffer, Moore and Williams is states do not enact policies in a vacuum. Similarly, states can no longer afford to stand still and hope their existing economic policies will be good enough to bring in new residents, jobs and capital. The economic competition among states is fierce, with many governors proposing significant tax cuts and other pro-growth reforms and legislatures looking for any advantage they can gain over other states to provide a more favorable business climate. As the research shows, people and businesses are moving to states willing to let them keep more of their own money and provide them with more economic freedom. This trend is changing the distribution of population and wealth across the nation, leading some states to new prosperity and others to economic decline.

In Depth: Tax Reform

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…

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