Tax Reform

Red States v. Blue States, Rich States v. Poor States

On last night’s episode of Hannity, Fox News host Sean Hannity spoke to former Speaker of the House and author of the newly released book Duplicity, Newt Gingrich. Among other topics, the two discussed a recent Gallup poll indicating that for the first time in the group’s tracking history, a majority of American states lean Republican. The group found that in 2008, 35 states favored the Democrat party, as opposed to merely 5 that leaned Republican. Gallup’s most recent data shows a dramatic swing, with 20 states leaning Republican and only 14 leaning Democrat. Lamenting the fact that the Washington-based media is completely ignoring the story, Gingrich described the shift as an “earthquake.”

Echoing Gallup’s own opinion, Gingrich called the data “very historic,” saying that “it matches what the Republican State Leadership Committee has been discovering at the [state] legislative and local level, where there are now more Republican state legislators than any time in the history of the Republican Party going back to 1854.”

Gingrich went on to link the national trend toward Republican-led government to the record-setting performances of Ted Cruz and Donald Trump at this week’s Iowa caucus: “Not only did Ted Cruz get the most votes in Republican history, but Donald Trump…got the second most votes in history.” Iowa is not listed as a Republican-leaning state in the Gallup results, but a record setting 180,000 people still showed up to participate in the Republican caucuses.

The ALEC Center for State Fiscal Reform recently released the complete eighth edition of the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, which breaks down the economic performance and the impact of fiscal policy on a state’s economic outlook. The results found in Rich States, Poor States mesh well with the data that Gallup collected, and contribute to the ongoing discussion of the impact of state fiscal policy.

According to Rich States, Poor States, which weighs fifteen types of state and local fiscal policy, red states outperform blue ones by a wide margin. Rich States, Poor States uses the fifteen data points to determine where each state ranks out of the nation’s 50. According to ALEC research, the 20 states that Gallup says leaned right also enjoy a significantly better economic outlook.

The red states are typically more likely to be Right-to-Work, less likely to levy death taxes, and have considerably lower tax burdens on both individuals and businesses. These factors matter, and are clearly making the red states more attractive to Americans seeking a place to live and work.

Of course, the most damning piece of evidence comes in the form of domestic migration patterns. The American people are fleeing blue states in pursuit of the more competitive, pro-growth red states. Of the 14 states that continue to lean Democrat, 11 have suffered a net loss of citizens to domestic outmigration since 2003. Less than half of the Republican-leaning states are facing the same problem.

Whether pulled from economic performance data, domestic migration, or party affiliation data, the results are clear: pro-growth, free market policies lead to fiscal success . Perhaps the blue states will eventually work to stop the migratory bloodletting before they, and their hardworking taxpayers, suffer irreparable harm.

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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