Tax Reform

2016’s Best and Worst State of the State Addresses

The ALEC Center for State Fiscal Reform recently issued the second annual State of the States report, an analysis of economic policy proposals outlined by the nation’s governors in their State of the State addresses this year. In 2016, 44 governors delivered State of the State or similar addresses, and among them were many proposals to confront tight budgets and improve economic performance in the states.

From these proposals emerge the two basic philosophies of tax and fiscal policy. One is the tax-and-spend approach in which states take a large share of individuals’ and businesses’ hard-earned income in order to grow government and intervene in the marketplace. The second is the pro-growth approach in which states use low-rate, broad-based tax structures to fund the core services of government and allow the free market to thrive. As chronicled in the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, states opting for the latter approach are more likely to prosper.

Encouragingly, this year’s State of the States report shows that many governors understand this reality and have proposed significant tax cuts and spending reforms. There are even governors in the traditional tax-and-spend states, such as Connecticut and Maine, who called for their states to change course in order to improve their states’ economic outlook. On the other hand, governors in some states continue to believe that raising taxes and expanding government programs are the only ways to confront the difficulties they face. The above map shows which governors proposed tax cuts, tax increases or both tax cuts and increases in their State of the State addresses.

This year, more governors proposed tax reductions, as opposed to tax increases. The taxes governors’ most commonly wanted to cut were income, business and property taxes, while the most frequently proposed tax increases were to discriminatory taxes, such as those on alcohol and tobacco. Additionally, a few governors argued for Medicaid expansion under the Affordable Care Act, tempted by the “free” federal dollars that are attached to the program. In reality, such a policy will only increase both the citizens’ and the states’ dependence on the federal government. Another policy discussed in the report is the minimum wage, which many governors are seeking to raise despite its record of increasing unemployment rates.

This year’s report features a new section, highlighting the nation’s “best” and “worst” State of the State addresses. The best addresses of the year belong to Arizona Governor Doug Ducey, Florida Governor Rick Scott, Maine Governor Paul LePage and Connecticut Governor Dannel Malloy. The addresses given by Minnesota Governor Mark Dayton, Washington Governor Jay Inslee, Louisiana Governor John Bel Edwards and Alaska Governor Bill Walker were named the very worst.

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…

+ Tax Reform In Depth