Tax Reform

States Becoming Taxpayer Friendly: Jonathan Williams on American Radio Journal

In his latest American Radio Journal commentary, ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams discussed states that have become more taxpayer friendly.

Well, as we all know, tax filing season is now upon us. For some, that brings back the dread of finding some obscure paperwork, navigating tax forms, and hopefully getting it right to avoid the worst of an IRS audit. When you pull, so cited by CNBC revealed that an incredible 25% of Gen Zers say they will need a therapist to deal with tax filing stress.

Additionally, 54% reported that filing taxes has either brought them to tears in the past or is expected to this year while looking on the bright side. Since they hate taxes so much, maybe Gen Zers will end up being the most conservative generation of all time. Continuing down that path of positivity, we’re coming back around to the annual release of our Rich States, Poor States ALEC-Laffer State Economic Competitiveness Index, an annual report I co-author with economists Arthur Laffer and Stephen Moore. As we gear up to release the 2024 state rankings.

I thought it appropriate to look back at the states that made the biggest improvements in the direction of pro-taxpayer policies throughout the 16-year history of Rich States, Poor States. Starting with one of the best turnaround stories in North Carolina: in the first edition of Rich States, Poor States in 2008, they ranked 21st for economic outlook over the next few editions, would drop to a low of 26.

In 2023, North Carolina fought its way all the way to number two. It’s largely due to the commitment to tax reform over the last decade plus, including the elimination of the death tax to switch to a flat tax in 2015, and business income tax reform in 2021. That will phase out the corporate income tax altogether over the next few years. As a result, North Carolina has seen tremendous economic growth and become one of the fastest-growing states in America.

Indiana has been in the top 10 states for a decade. But it didn’t always enjoy that policy success, starting with Governor Mitch Daniels and continued by Governor Mike Pence. The Hoosier State methodically reduced income taxes for individuals and businesses, enacted Right to Work, killed the state’s death tax, all streamlining government and passing perhaps what is the strongest state-level balanced budget amendment in America. Due to this heavy lifting with these free-market reforms, Indiana’s economic outlook improved from 24th back in 2012 to its current top-tier status.

One of the more impressive stories in Rich States, Poor States has been the tremendous improvement in West Virginia. Ranked 38th in the first edition of Rich States, Poor States, West Virginia moved up to 28th in 2023. Not to give away the Mountain State’s 2024 ranking, but the tax cuts made in 2023 have helped improve that state’s rankings substantially once again when the new rankings are released.

Likewise, Kentucky has improved significantly over the course of the republication. The Bluegrass State ranks 27th after coming in 44th back in 2008. Similar to North Carolina, Kentucky switched to the flat tax and accelerated its move towards economic competitiveness. Legislation passed, and Kentucky has the potential to fully phase out the personal income tax over time and make it the first state since Alaska over 40 years ago to eliminate the personal income tax.

This would likely make Kentucky the most improved state in Rich States, Poor States of all time, but for now, that title belongs to the Buckeye State. Lawmakers can right the ship on economic policy, and they have in the Buckeye State for a long time. Ohio has one of the highest rates in personal and corporate income taxes.

Ohio lawmakers have been persistent at lowering those rates. And by 2023, Ohio, which ranked 47 back in the first edition of Rich States, Poor States, moved all the way to rank 20. At best, those reforms are bearing fruit as well. Ohio’s net domestic migration numbers, which had been negative since at least the 1980s, have now moved positive for the very first time in 2023.

Rich States, Poor States is full of these positive stories, like these from the 50 laboratories of democracy. It’s often easy to beat up on states that have abysmal rankings, and the ones like New York, California, and Illinois that pursue big government policies rightfully deserve it. But beating up on these states for the ranking today doesn’t mean that they can’t turn things around tomorrow.

If you’re in a state and you’d like to have a better public policy climate and outlook, you can check that ranking at But there’s still hope that someday your economic outlook can improve with these free-market reforms that are tested and true and proven with the right leadership.

Listen to the full episode.

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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