Today is May 6, the date in 1862 when Henry David Thoreau passed away. Thoreau famously refused to pay his taxes because of his opposition to war and slavery, spending a night in jail until someone paid his overdue taxes...
- The Tax Policy Blog
- New "Rich States, Poor States" Report Looks at ...
New "Rich States, Poor States" Report Looks at Tax and Spending Policy
This week, the American Legislative Exchange Council released their 5th edition of the annual Rich States, Poor States report, which ranks states according to a variety of tax, spending, and regulatory policies.
Some of the report's insights on taxes echo observations that we have made in our State Business Tax Climate Index. For example, in our Index, one of the things that top-scoring states have in common is that they are able to run their state without collecting one of the five major taxes. Rich States, Poor States praises such states, citing that limited taxes make for better economic indicators:
"Over the last decade, the nine states without an income tax have outperformed the nine states with the highest income tax, by every measure. Low tax states beat the national average, and high tax states fail to live up to it."
Below are the top and bottom ten ranked states in Rich States, Poor States:
|1. Utah||41. Minnesota|
|2. South Dakota||42. New Jersey|
|3. Virginia||43. Rhode Island|
|4. Wyoming||44. Connecticut|
|5. North Dakota||45. Oregon|
|6. Idaho||46. Hawaii|
|7. Missouri||47. Maine|
|8. Colorado||48. Illinois|
|9. Arizona||49. Vermont|
|10. Georgia||50. New York|
What's interesting to see is that even though Rich States, Poor States looks at a wide variety of policy issues, many of the states that rank poorly on their metric also rank in the bottom ten in the State Business Tax Climate Index. Minnesota, Rhode Island, Vermont, New York and New Jersey are in the bottom ten of both indices. Wyoming, South Dakota and Utah rank in the top ten in both. In seems as though states with poor tax policy tend to have trouble in other aspects of economic competition as well.
For our apples-to-apples measure of tax costs between the states, you can also check out Location Matters, which calculates tax bills for seven model firms in each of the fifty states.
Follow Scott Drenkard on Twitter @ScottDrenkard.
Get Email Updates from the Tax Foundation
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.