The States Where Pro-Growth Policies Rule: Jonathan Williams and Lee Schalk in Governing Magazine
Federal tax cuts may be in jeopardy, but some states are reducing the tax burdens on their citizens and businesses. It’s not surprising that millions are moving to states with robust free-market policies — and leaving those that don’t have them.
Jonathan Williams, ALEC Executive Vice President of Policy and Chief Economist, and Lee Schalk, ALEC Vice President of Policy, recently co-authored in op-ed in Governing about the impact of high federal income taxes on Americans and the economic competitiveness of states based on the 17th edition of “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.”
With Tax Day here and the presidential campaign in full swing, tax burdens are top of mind. Two-thirds of Americans say federal income taxes are too high. The November election could determine whether those rates go even higher. It’s a dynamic that also will play out in state capitols, with 44 states holding legislative elections this year and 11 electing governors.
At the federal level, the fate of former President Donald Trump’s Tax Cuts and Jobs Act (TCJA) of 2017, which resulted in a $1.5 trillion net tax cut, remains unclear. If President Biden gets his way and Congress fails to act, the most popular TCJA tax cuts for individuals and small businesses will expire at the end of 2025.
Washington is already taxing more than its fair share. The federal government collected $4.4 trillion in tax revenue in 2023, up from $2.78 trillion a decade earlier. Clearly, the federal government does not have a revenue problem but a spending problem, as the national debt hurtles toward $35 trillion.
To counter D.C.’s big-government policies, many states are implementing pro-growth and pro-worker policies, including a dozen that lowered their income tax rates in 2023.
These states are highlighted in the newly released 17th edition of “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.” Since 2007, our annual report has documented how cutting taxes, paying down debt and maintaining free-market policies have significantly helped states attract new residents and jobs.
…
With the future of the historic 2017 federal tax cuts unknown, many states are leading the way with lower taxes, responsible budgeting and other pro-growth economic policies. As “Rich States, Poor States” reveals, Americans will continue their march toward these freedom-loving states. Federal leaders should look to states like Utah and Texas for inspiration and avoid the mistakes of New York and California.