Wisconsin Moves from 32nd to 15th on Rich States, Poor States Economic Outlook Ranking
MacIver News Service | May 23, 2013[Madison, Wisc…] Wisconsin improved 17 spots on the American Legislative Exchange Council’s Rich States, Poor States Economic Outlook Ranking from 32nd to 15th, the greatest improvement of any state over last year.
Rich States, Poor States has been published annually since 2008. Dr. Arthur B. Laffer, an award-winning economist who served on President Ronald Reagan’s Economic Policy Advisory Board; Stephen Moore, an economist and writer for the Wall Street Journal and former Senior Economics Fellow at the Cato Institute; and Jonathan Williams, the Director of the Center for State Fiscal Reform at ALEC authored the report.
The study looks at 15 equally-weighted policy variables to predict economic growth in each state. The variable’s include income tax rates, overall tax burden, recent tax policy changes, total public employees per capita, and others. Wisconsin gets high marks on the ranking for having the minimum wage at the federal floor, and not levying an estate tax. However, the Badger State gets docked points for having high property and income taxes.
In the previous five years of the study, the best economic outlook ranking Wisconsin received was 23rd in 2010. Wisconsin has consistently ranked in the bottom half of states.
According to the report, Wisconsin’s economic outlook has improved so much because of Governor Scott Walker’s fiscal policies. The authors write “When a state changes policy, for better or worse, it immediately affects the incentive structure for individuals and businesses alike, and the change in incentives directly influences the state’s competitiveness. Through statistical and anecdotal evidence, this publication makes a compelling case that pro-growth fiscal policy is what really makes the difference for economic vitality in the states.”
If Walker’s income tax cut is signed into law and property taxes are held static, it is possible that Wisconsin could have an even better economic outlook in 2014.
The only Midwest state to have a better economic outlook than Wisconsin is Indiana, which ranks 14th. Illinois, a state that raised income taxes by 66 percent in 2011, ranks 48th and Minnesota, a state that is considering multiple tax hikes, ranks 46th.
Wisconsin is also improving in the Economic Performance ranking, which measures a state’s gross domestic product growth, absolute domestic migration (net amount of people moving in and out of a state), and non-farm payroll employment from 2002-2011.
The state currently ranks 41st in economic performance, but improved from 42nd last year, and 44th in 2010 when Walker took office.
The study shows that from 2002-2011 Wisconsin had an absolute domestic migration of negative 24,370 people. Florida and Texas, both of which do not have a state income tax, are the top ranked states for domestic migration. Florida and Texas gained 1.1 million people and 947,000 people respectively.
The full study can be seen here.