ALEC Rich States, Poor States Report

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The American Legislative Exchange Council, a nonpartisan organization of state legislators, releases an annual report entitled Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, which analyzes economic competitiveness in each state. The report is authored by Arthur Laffer, Stephen Moore (chief economist at the Heritage Foundation), and Jonathan Williams, the director of the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council. The report seeks to note which states' policies might produce economic growth and which states' policies might inhibit economic growth.[1]

2014 report

In 2014, the report issued its annual ranking of states in two areas: First, the state was ranked based on an Economic Outlook measure, which calculated how the state may be expected to perform economically in the future based on 15 policy variables. Second, the state was ranked based on an Economic Performance measure, which calculated 3 policy variables to rank the state's economic performance between the years 2002-2012 (for each of these variables, see below).[2]

The top five states on the Economic Outlook Ranking included:

The bottom 5 states on the Economic Outlook Ranking included:

The top five states on the Economic Performance Ranking included:

The bottom 5 states on the Economic Performance Ranking included:


Economic Outlook ranking

The report uses an Economic Outlook Ranking, which is a forecast-based method of calculating a state's current standing in 15 state policy variables.[2] According to the report, each of these factors is influenced directly by state lawmakers through the legislative process. The report also assumes that states which spend less on income transfer programs and states which tax less experience higher growth rates than states that have higher tax rates and more state government spending. These variables were equally weighted and combined to create a ranking of the states. The 15 policy variables include the following:

  • Marginal personal income tax rate
  • Marginal corporate income tax rate
  • Personal income tax progressivity
  • Property tax burden
  • Sales tax burden
  • Remaining tax burden
  • Estate tax (Yes or No)
  • Recent tax changes
  • State minimum wage
  • Debt service as share of tax revenue
  • Public employees per 10,000 residents
  • State legal system
  • Right to work state (Yes or No)
  • Tax or expenditure limit
  • Workers' compensation costs

Economic Performance ranking

The report also uses an Economic Performance Ranking method, which is a backward-looking measurement based on a state’s performance on three variables, which include the state's Gross Domestic Product (GDP), domestic migration to the state in absolute numbers, and the state's non-farm private employment. These variables are equally weighted and combined to produce a ranking of the states.[2]

See also

External links