New 2014 Rich States, Poor States Rankings Show States Are Making Large Reforms

Since 2008, Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index has used the latest economic data to determine which states are doing well and which states are struggling. The past 50 years of data point to a clear connection between pro-growth policies of lower taxes, less regulations and competitive labor policies. The states that embrace free markets and limited government fare much better than their high-tax, big government counterparts.

Utah, South Dakota, Indiana, North Dakota and Idaho—this year’s top five states—showcase how good economic policy can lead to economic prosperity, while New York, Vermont, Illinois, California and Minnesota—the bottom five states—struggle to maintain their once vibrant economies. The index is intended to be a tool for state policymakers who are concerned about maximizing the economic growth potential for their states. This year’s top five and bottom five show a blueprint for legislators everywhere on what can be done to improve a state’s economic outlook and what policies are likely to hamper economic growth.

The report is authored by economist Dr. Arthur B. Laffer,  Stephen Moore, chief economist at the Heritage Foundation, and Jonathan Williams, director of the American Legislative Exchange Council’s Center for State Fiscal Reform. The authors rank the 2014 economic outlook of states using 15 equally weighted policy variables, including various tax rates, regulatory burdens and labor policies. The 15 economic policy variables used by the authors to rank the states have shown over time to be among the most influential variables for state economic growth. States with no or low personal and corporate income taxes, less spending and right-to-work laws were most likely to have a better economic outlook than states with high income taxes. In fact, over the last ten years, the nine states with the lowest income tax rates have outperformed the nine states with the highest income taxes in population, job growth, and even revenue growth.

Here are the results from this year’s report:


Overall Economic Outlook for 2014

Top Ten

1. Utah
2. South Dakota
3. Indiana
4. North Dakota
5. Idaho
6. North Carolina
7. Arizona
8. Nevada
9. Georgia
10. Wyoming

Bottom Ten

41. Rhode Island
42. Oregon
43. Montana
44. Connecticut
45. New Jersey
46. Minnesota
47. California
48. Illinois
49. Vermont
50. New York

Especially notable are the major improvements in economic outlook for North Carolina, Indiana and Michigan. North Carolina’s monumental tax overhaul last year propelled the state to rank 6th in the nation for economic outlook, compared to 22nd last year. Indiana is a similar success story, and thanks to major pro-growth tax changes, Indiana went from ranking 24th in the nation in 2012 to 14th in 2013, and finally to 3rd best economic outlook rank for this edition.

Michigan is a state that has long struggled to achieve economic growth, but with lawmakers passing competitive labor and tax reforms, Michigan went from 20th last year to 12th this year in overall economic outlook.

By analyzing the most recent economic data and also observing trends over a long period of time, Rich States, Poor States is an invaluable asset for discovering the keys to economic growth.

To view the latest Rich States, Poor States state ranking data, visit

In Depth: Cronyism

Cronyism in tax policy stifles innovation, hinders competition and introduces a deep temptation for corruption. The 2014 ALEC Center for State Fiscal Reform study, The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth, found that in the most recent year in which states published their respective tax expenditure…

+ Cronyism In Depth