New 2015 Rich States, Poor States Rankings Show Which States Are Most Competitive

Public policy matters to economic performance. Economic theory and data have established this link clearly. Most notably, limited government, free market policies that unlock the creative potential entrepreneurs and small business matter deeply to state economic health. Rich States, Poor States, released today and now in its 8th year, compares the 50 states public policy climate to see which states are most poised for growth.


Utah again earns the top spot for states with the best economic outlook, followed by North Dakota, Indiana, North Carolina and Arizona, according to the newest edition of Rich States, Poor States. New York comes in dead last, followed by Vermont, Minnesota, Connecticut, and New Jersey.

The report also revealed many states significantly improved or fell in the rankings. Kentucky was the biggest winner in the rankings this year and improved by nine spots. Illinois came in second for largest improvements by climbing eight spots, while Oklahoma improved by five spots and Wisconsin by four spots. On the other hand, Michigan was the biggest loser this year and fell in the rankings by 12 spots. Delaware fell 11 spots, Pennsylvania fell eight spots and South Dakota fell seven spots. Wisconsin, North Carolina and Indiana’s high rankings are notable behind significant pro-growth reform in recent years.

The report is authored by economist Dr. Arthur B. Laffer, Stephen Moore, chief economist at the Heritage Foundation, and Jonathan Williams, Vice President of the American Legislative Exchange Council’s Center for State Fiscal Reform. The authors rank the 2015 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.

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