According to a new study from the American Legislative Exchange Council (ALEC), Vermont s economic outlook now ranks 49th out of 50 states. The second edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index offers a roadmap for economic recovery based on state policies that have a proven impact on growth. High personal income taxes, high property taxes, along with some of the highest labor costs in America all hurt Vermont s economic outlook. On the positive side, the study gives good marks to Vermont for a relatively low sales tax burden and a quality legal system.
Among bordering states, New Hampshire ranks 37th, Massachusetts ranks 26th and New York ranks 50th.
The report shows how federal stimulus dollars may simply encourage out-of-control state spending, which is up 124 percent over the last 10 years, without requiring states to make the tough decisions needed to bring about financial stability. States were quick to increase spending and add programs during the good times, said Senator Kevin Mullin, ALEC s VermontState Chairman. We need to make tough choices to live within our means and prioritize our budget. The best solution to our budget woes is to control state spending and promote policies that foster economic growth and job creation.
Co-author and renowned economist Dr. Arthur B. Laffer summarized the report's findings when he said, States cannot tax their way into prosperity. Rich States, Poor States presents rankings of the 50 states based on the relationship between policies and performance revealing which states are best positioned to make a recovery, and which are not.
Laffer and his co-authors, Steve Moore, senior economics writer at The Wall Street Journal, and Jonathan Williams, director of the Tax and Fiscal Policy Task Force for ALEC, analyze how economic competitiveness drives income, population and job growth in the states. They found that, states with a high and rising tax burden are more likely to suffer through economic decline, while those with lower and falling tax burdens are more likely to enjoy robust economic growth.
The top performing states keep taxes, spending, and regulatory burdens low, while the biggest losers in the book tend to share similar policies of high tax rates, unsustainable spending and regulation, said co-author, Jonathan Williams. State governments that believe they can bring about economic recovery by growing government and increasing taxes are sadly mistaken.
Top Fives States
Bottom Five States
1. Utah
46. New Jersey
2. Colorado
47. Maine
3. Arizona
48. Rhode Island
4. Virginia
49. Vermont
5. South Dakota
50. New York
To read more about the state-to-state comparisons, see the individual state analysis, and view the full report, download it for free at www.alec.org.