RSPS 7th Edition

ALEC-Laffer State Economic Competitiveness Index
Rich States, Poor States
Arthur B. Laffer Stephen Moore Jonathan Williams
Rich States, Poor States ALEC-Laffer State Economic Competitiveness Index 2014 American Legislative Exchange Council All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system without the prior permission of the publisher. Published by American Legislative Exchange Council 2900 Crystal Drive Arlington, VA 22202 www.alec.org Dr. Arthur B. Laffer, Stephen Moore, and Jonathan Williams, Authors Designed by Joel Sorrell Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index has been published by the American Legislative Exchange Council, Americas largest nonpartisan, voluntary membership organization of state legislators. Made up of nearly one-third of Americas state elected officials, the Council provides a unique opportunity for state lawmakers, business leaders and citizen organizations from around the country to share experiences and develop state-based, pro-growth models based on academic research, existing state policy and proven business practices. The American Legislative Exchange Council is classified by the Internal Revenue Service as a 501(c)(3) nonprofit and public policy and educational organization. Individuals, philanthropic foundations, corporations, companies, or associations are eligible to support the Councils work through tax-deductible gifts.
State Rankings
he Economic Outlook Ranking is a forecast based on a states current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend lessespecially on income transfer programs, and states that tax lessparticularly on productive activities such as working or investingexperience higher growth rates than states that tax and spend more. The Economic Performance Ranking is a backward-looking measure based on a states performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employmentall of which are highly influenced by state policy. This ranking details states individual performances over the past 10 years based on this economic data.
Table 1 | ALEC-Laffer State Economic Outlook Rankings, 2014

Based upon equal-weighting of each states rank in 15 policy variables Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 State Utah South Dakota Indiana North Dakota Idaho North Carolina Arizona Nevada Georgia Wyoming Virginia Michigan Texas Mississippi Kansas Florida Wisconsin Alaska Tennessee Alabama Oklahoma Colorado Ohio Missouri Iowa Rank 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 State Arkansas Delaware Massachusetts Louisiana West Virginia South Carolina New Hampshire Pennsylvania Maryland Nebraska Hawaii New Mexico Washington Kentucky Maine Rhode Island Oregon Montana Connecticut New Jersey Minnesota California Illinois Vermont New York
2014 ALEC-LAFFER STATE ECONOMIC COMPETITIVENESS INDEX
Table 2 | ALEC-Laffer State Economic Performance Rankings, 2002-2012

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 State Texas Utah Wyoming North Dakota Montana Washington Nevada Arizona Oklahoma Idaho Alaska North Carolina Oregon Virginia South Dakota Colorado Hawaii West Virginia Florida Nebraska Arkansas South Carolina New Mexico Iowa Tennessee Delaware Georgia Kentucky Louisiana Alabama Maryland Kansas Minnesota New Hampshire New York Vermont Pennsylvania Indiana Mississippi Missouri Massachusetts Maine California Wisconsin Connecticut Illinois Rhode Island New Jersey Ohio Michigan State Gross Domestic Product 4 5 2 1 7 13 12 23 9 16 3 22 8 19 17 26 11 14 31 10 25 37 24 15 33 21 42 35 6 27 18 20 29 41 28 40 36 34 30 46 38 47 32 43 44 39 48 45 49 50 Absolute Domestic Migration 1 18 21 26 19 9 8 4 17 14 30 3 11 12 24 10 31 22 2 35 15 6 23 34 7 20 5 16 44 13 42 38 40 27 50 29 32 33 36 28 43 25 49 37 41 48 39 46 45 47 Non-Farm Payroll 3 2 4 1 6 11 13 9 12 8 5 17 23 15 7 14 10 18 25 16 26 24 20 19 33 37 34 30 31 41 22 29 27 28 21 32 35 38 44 42 36 46 39 40 43 47 48 45 49 50
www.alec.org
Connecticut
Alabama
30
Cumulative 10%
8% 6% 4% 2% 0% -2% -4%
Economic Performance Rank
20
46.6% Rank: 27
AL U.S. Variable
Economic Outlook Rank
Economic Performance Rank (1=best 50=worst)

A backward-looking measure based on the states performance (equal-weighted average) in the three important performance variables shown below. These variables are highly influenced by state policy.
Economic Outlook Rank (1=best 50=worst)

A forward-looking forecast based on the states standing (equal-weighted average) in the 15 important state policy variables shown below. Data reflect state and local rates and revenues and any effect of federal deductibility.
Historical Ranking Comparison
2008 2009 2010 2011 2012 2013
State Gross Domestic Product

Growth 2002-2012
ECONOMIC OUTLOOK RANK
15 16 17 20 21 17
Data 4.02% 4.23% -$1.76 $15.65 $24.02 $24.13 No -$0.30 8.1% 592.5 Rank 12 6 1 1 29 43 1 19 23 40
Top Marginal Personal Income Tax Rate Top Marginal Corporate Income Tax Rate
(change in tax liability per $1,000 of income)
Personal Income Tax Progressivity
Property Tax Burden 03 04 05 06 07 08 09 10 11 12 Sales Tax Burden
(per $1,000 of personal income)
Absolute Domestic Migration

Cumulative 2003-2012
40 35 30 25 20 15 10 5 0 -5 -10 -15
104,239
Rank: 13
(in thousands)
Remaining Tax Burden
Estate/Inheritance Tax Levied?

(2012 & 2013, per $1,000 of personal income)
Recently Legislated Tax Changes
Debt Service as a Share of Tax Revenue 03 04 05 06 07 08 09 10 11 12 Public Employees Per 10,000 of Population (full-time equivalent)
(tort litigation treatment, judicial impartiality, etc.)
Non-Farm Payroll Employment

Cumulative Growth 2002-2012
3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
State Liability System Survey
0.1%
Rank: 41
AL U.S.
52.8
43
State Minimum Wage

(federal floor is $7.25)
$7.25 $1.97 Yes 0
1 30 1 34
Average Workers Compensation Costs

(per $100 of payroll)
Right-to-Work State?
(option to join or support a union)
Number of Tax Expenditure Limits 03 04 05 06 07 08 09 10 11 12

(0= least/worst 3=most/best)
Delaware
Alaska
11
15%
18
79.5% Rank: 3
AK U.S. Variable


2008 2009 2010 2011 2012 2013

10% 5% 0% -5% -10% -15%
37 38 22 29 29 21
Data 0.00% 9.40% $0.00 $44.29 $9.92 $14.96 No -$20.67 5.9% 753.2 Rank 1 43 2 42 5 8 1 1 8 49
Top Marginal Personal Income Tax Rate Top Marginal Corporate Income Tax Rate Personal Income Tax Progressivity Property Tax Burden
03
04
05
06
07
08
09
10
11
12

30 20 10 0 -10 -20 -30 -40 -50
Sales Tax Burden
-7,930
Rank: 30
(in thousands)
Estate/Inheritance Tax Levied? Recently Legislated Tax Changes

Debt Service as a Share of Tax Revenue 03 04 05 06 07 08 09 10 11 12 Public Employees Per 10,000 of Population (full-time equivalent) State Liability System Survey

4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
12.8%
Rank: 5
AK U.S.
69.1
13
State Minimum Wage

$7.75 $3.01 No 1
34 50 50 14

www.alec.org
Connecticut
Arizona
8
10% 8% 6% 4% 2% 0% -2% -4% -6% -8%
7
50.7% Rank: 23
AZ U.S.


2008 2009 2010 2011 2012 2013

Cumulative Growth 12% 2002-2012

Variable
6 3 3 12 9 6
Data 4.54% 6.50% $10.60 $31.72 $36.69 $12.80 No -$0.55 11.6% 431.8
Rank 13 21 31 27 45 3 1 12 46 2

Cumulative 160
140 120 100 80 60 40 20 0
2003-2012
618,037
Rank: 4
(in thousands)

Debt Service as a Share of Tax Revenue Public Employees Per 10,000 of Population (full-time equivalent)
03
04
05
06
07
08
09
10
11
12

8% 6% 4% 2% 0% -2% -4% -6% -8% -10%
9.0%
Rank: 9
AZ U.S.
66.8
17
State Minimum Wage
$7.90 $1.61 Yes 2
35 14 1 3

Delaware
Arkansas
21
6% 4% 2% 0% -2% -4%
26
47.7% Rank: 25
AR U.S. Variable


2008 2009 2010 2011 2012 2013

Cumulative Growth 2002-2012 8%
11 12 13 13 11 24
Data 7.00% 6.50% $14.42 $18.72 $37.70 $18.17 No $0.92 5.3% 598.1 Rank 35 21 40 4 46 26 1 43 5 41
Personal Income Tax Progressivity Property Tax Burden
03
04
05
06
07
08
09
10
11
12

25 20 15 10 5 0
Sales Tax Burden
(in thousands)
80,218
Rank: 15

Debt Service as a Share of Tax Revenue Public Employees Per 10,000 of Population (full-time equivalent) 03 04 05 06 07 08 09 10 11 12 State Liability System Survey

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
3.1%
Rank: 26
AR U.S.
57.2
35
State Minimum Wage
$7.25 $1.19 Yes 1
1 3 1 14


www.alec.org
Connecticut
California
43
8% 6% 4% 2% 0% -2% -4% -6%
47
44.4% Rank: 32
CA U.S. Variable


2008 2009 2010 2011 2012 2013

42 43 46 47 38 47
Data 13.30% 8.84% $37.80 $32.65 $24.47 $19.20 No $4.03 10.4% 466.1 Rank 50 38 50 28 31 28 1 49 39 4
Top Marginal Personal Income Tax Rate Top Marginal Corporate Income Tax Rate Personal Income Tax Progressivity Property Tax Burden 03 04 05 06 07 08 09 10 11 12 Sales Tax Burden
Absolute Domestic Migration Cumulative 2003-2012 -1,429,475

(in thousands)
0 -50 -100 -150 -200 -250 -300 -350
Rank: 49


4% 2% 0% -2% -4% -6% -8%
50.6
47
0.4%
Rank: 39
CA U.S.
State Minimum Wage

$8.00 $2.92 No 2
39 48 50 3


Delaware
Colorado
16
10% Cumulative 8% 6% 4% 2% 0% -2% -4%
22
46.9% Rank: 26
CO U.S. Variable


2008 2009 2010 2011 2012 2013

Growth 2002-2012
9 2 2 6 8 16
Data 4.63% 4.63% $6.27 $38.08 $23.91 $14.52 No $0.48 11.8% 527.0 Rank 14 8 20 38 27 7 1 40 47 21

50
(in thousands)
206,484
Rank: 10
40 30 20 10 0 -10

Debt Service as a Share of Tax Revenue Public Employees Per 10,000 of Population (full-time equivalent) 03 04 05 06 07 08 09 10 11 12

4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
64.2
23
7.1%
Rank: 14
CO U.S.
State Minimum Wage

$8.00 $1.42 No 3
39 8 50 1


www.alec.org
Connecticut
Connecticut
45
8% 6% 4% 2% 0% -2% -4%
44
35.8% Rank: 44
CT U.S. Variable


2008 2009 2010 2011 2012 2013

40 32 36 35 44 43
Data 6.70% 9.00% $7.67 $45.36 $15.98 $15.43 Yes $1.90 8.3% 513.0 Rank 30 40 26 43 10 11 50 47 26 16

(in thousands)
0 -5 -10 -15 -20 -25
-117,924
Rank: 41

Debt Service as a Share of Tax Revenue Public Employees Per 10,000 of Population (full-time equivalent) State Liability System Survey
03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
63.8
25
-0.9%
Rank: 43
CT U.S.
State Minimum Wage

$8.70 $2.99 No 1
47 49 50 14
Average Workers Compensation Costs Right-to-Work State?

Delaware
Delaware
26
8% 6% 4% 2% 0% -2% -4%
27
51.1% Rank: 21
DE U.S. Variable


2008 2009 2010 2011 2012 2013

10% Cumulative Growth
2002-2012
31 31 37 34 34 30
Data 7.85% 10.41% $13.70 $17.50 $0.00 $48.06 Yes -$0.55 8.6% 544.1 Rank 39 47 38 3 1 50 50 13 29 27

9 8 7 6 5 4 3 2 1 0
44,580
Rank: 20
(in thousands)

03
04
05
06
07
08
09
10
11
12

4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
75.8
1.2%
Rank: 37
DE U.S.
State Minimum Wage

$7.25 $1.77 No 2
1 21 50 3


www.alec.org
Florida
19
Cumulative 12%
10% 8% 6% 4% 2% 0% -2% -4%
16
45.0% Rank: 31
FL U.S. Variable


2008 2009 2010 2011 2012 2013

Growth 2002-2012
16 11 5 10 13 9
Data 0.00% 5.50% $0.00 $34.80 $28.34 $21.83 No $0.03 9.1% 466.7
Rank 1 13 2 30 38 40 1 31 34 5
03
04
05
06
07
08
09
10
11
12

300 250 200 150 100 50 0 -50
Sales Tax Burden
1,027,561
Rank: 2
(in thousands)

03
04
05
06
07
08
09
10
11
12

6% 4% 2% 0% -2% -4% -6% -8%
55.3
41
3.4%
Rank: 25
FL U.S.
State Minimum Wage
$7.93 $1.82 Yes 2
37 22 1 3

Georgia
27
6% 4% 2% 0% -2% -4%
9
38.1% Rank: 42
GA U.S.


2008 2009 2010 2011 2012 2013

8% Cumulative Growth 2002-2012

Variable
8 8 9 11 10 8
Data 6.00% 6.00% $6.53 $29.95 $24.72 $11.32 No -$0.37 7.5% 518.5
Rank 27 14 22 23 32 1 1 18 19 18

140 120 100 80 60 40 20 0
(in thousands)
485,993
Rank: 5

03
04
05
06
07
08
09
10
11
12

4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
64.0
24
2.2%
Rank: 34
GA U.S.
State Minimum Wage

$7.25 $1.88 Yes 0
1 24 1 34


www.alec.org
Hawaii
17
8% 6% 4% 2% 0% -2% -4%
36
61.8% Rank: 11
HI U.S. Variable


2008 2009 2010 2011 2012 2013

41 41 39 46 46 40
Data 11.00% 6.40% $13.54 $22.62 $42.62 $24.54 Yes -$0.74 8.5% 535.1 Rank 48 19 37 9 50 45 50 9 27 24

6 4 2 0 -2 -4 -6 -8 -10 -12 -14
-26,409
Rank: 31
(in thousands)

03
04
05
06
07
08
09
10
11
12

5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
62.5
29
8.7%
Rank: 10
HI U.S.
State Minimum Wage

$7.25 $1.66 No 1
1 16 50 14


Idaho
10
Cumulative 14%
12% 10% 8% 6% 4% 2% 0% -2% -4%
5
54.4% Rank: 16
ID U.S.


2008 2009 2010 2011 2012 2013

Growth 2002-2012

Variable
10 14 7 5 6 7
Data 7.40% 7.40% $13.26 $26.41 $22.92 $15.62 No -$0.47 5.8% 491.2
Rank 37 28 36 14 24 13 1 14 7 10
03
04
05
06
07
08
09
10
11
12

(in thousands)
25 20 15 10 5 0 -5
Sales Tax Burden
94,969
Rank: 14

03
04
05
06
07
08
09
10
11
12

6% 4% 2% 0% -2% -4% -6% -8%
70.5
9.7%
Rank: 8
ID U.S.
State Minimum Wage
$7.25 $2.02 Yes 1
1 32 1 14


www.alec.org
Illinois
46
6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
48
39.7% Rank: 39
IL U.S. Variable


2008 2009 2010 2011 2012 2013

43 44 47 44 48 48
Data 5.00% 9.50% $1.42 $43.51 $16.36 $21.68 Yes $0.43 11.1% 499.4 Rank 17 44 14 41 11 38 50 39 43 11
03
04
05
06
07
08
09
10
11
12
Property Tax Burden

0 -10 -20 -30 -40 -50 -60 -70 -80 -90
-623,467
Rank: 48
Sales Tax Burden
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
-1.6%
Rank: 47
IL U.S.
51.3
46
State Minimum Wage

$8.25 $2.83 No 0
44 47 50 34

Indiana
38
8% 6% 4% 2% 0% -2% -4%
3
43.1% Rank: 34
IN U.S.


2008 2009 2010 2011 2012 2013


Variable
12 17 20 16 24 14
Data 5.02% 7.50% $0.67 $27.44 $27.25 $15.85 No -$0.59 9.0% 505.0 Rank 20 29 13 17 35 14 1 11 33 13

15 10 5 0 -5 -10 -15
-27,203
Rank: 33
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% -8%
69.0
14
0.5%
Rank: 38
IN U.S.
State Minimum Wage
$7.25 $1.16 Yes 1
1 2 1 14


www.alec.org
Iowa
24
10% 8% 6% 4% 2% 0% -2% -4%
25
54.6% Rank: 15
IA U.S. Variable


2008 2009 2010 2011 2012 2013

25 35 28 23 22 25
Data 5.42% 9.90% $11.89 $35.15 $23.34 $17.57 Yes -$0.12 5.0% 564.8 Rank 23 46 33 32 26 21 50 21 3 33
03
04
05
06
07
08
09
10
11
12

1 0 -1 -2 -3 -4 -5 -6 -7 -8 -9
-27,470
Rank: 34
Sales Tax Burden
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
69.5
10
4.9%
Rank: 19
IA U.S.
State Minimum Wage

$7.25 $1.90 Yes 1
1 26 1 14


Kansas
32
Cumulative 10%
8% 6% 4% 2% 0% -2% -4%
15
51.6% Rank: 20
KS U.S. Variable


2008 2009 2010 2011 2012 2013

Growth 2002-2012
29 24 25 27 26 11
Data 4.80% 7.00% $7.56 $33.76 $28.32 $12.88 No -$2.38 10.3% 680.8 Rank 15 26 25 29 37 4 1 4 38 48

(in thousands)
2 0 -2 -4 -6 -8 -10 -12 -14
-58,811
Rank: 38


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
70.6
2.7%
Rank: 29
KS U.S.
State Minimum Wage

$7.25 $1.54 Yes 0
1 10 1 34


www.alec.org
Kentucky
28
6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
39
42.8% Rank: 35
KY U.S. Variable


2008 2009 2010 2011 2012 2013

44 36 40 40 39 38
Data 8.20% 6.00% $5.51 $20.42 $19.69 $21.67 Yes $0.36 13.5% 564.4 Rank 42 14 18 7 17 37 50 37 50 32

20 15 10 5 0 -5 -10
75,684
Rank: 16
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
56.8
38
2.5%
Rank: 30
KY U.S.
State Minimum Wage

$7.25 $1.96 No 1
1 29 50 14


Louisiana
29
20% 15% 10% 5% 0% -5% -10%
29
74.8% Rank: 6
LA U.S. Variable


2008 2009 2010 2011 2012 2013

24 18 16 15 19 28
Data 3.62% 5.20% $10.19 $20.42 $37.84 $18.42 No -$0.02 11.4% 589.8 Rank 11 12 29 6 47 27 1 24 44 39

50 0 -50 -100 -150 -200 -250 -300
-253,511
Rank: 44
(in thousands)


6% 4% 2% 0% -2% -4% -6% -8%
46.5
49
2.4%
Rank: 31
LA U.S.
State Minimum Wage
$7.25 $2.06 Yes 2
1 36 1 3


www.alec.org
Maine
Maine
42
8% 6% 4% 2% 0% -2% -4%
40
34.2% Rank: 47
ME U.S. Variable


2008 2009 2010 2011 2012 2013

46 47 44 48 47 41
Data 7.95% 8.93% $19.31 $47.52 $19.99 $20.05 Yes -$0.75 6.2% 583.2 Rank 41 39 47 46 19 31 50 8 9 38
Top Marginal Personal Income Tax Rate Top Marginal Corporate Income Tax Rate Personal Income Tax Progressivity Property Tax Burden Sales Tax Burden
03
04
05
06
07
08
09
10
11
12

10 8 6 4 2 0 -2 -4
12,953
Rank: 25
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
69.2
12
-1.6%
Rank: 46
ME U.S.
State Minimum Wage

$7.50 $2.24 No 1
31 41 50 14

Maryland
Maryland
31
8% 6% 4% 2% 0% -2% -4%
34
53.7% Rank: 18
MD U.S. Variable


2008 2009 2010 2011 2012 2013

28 28 29 21 20 35
Data 8.95% 8.25% $6.95 $28.27 $13.08 $17.91 Yes $1.15 6.4% 528.2 Rank 43 35 23 19 8 25 50 46 11 23
Personal Income Tax Progressivity Property Tax Burden Sales Tax Burden
03
04
05
06
07
08
09
10
11
12

10 5 0 -5 -10 -15 -20 -25 -30 -35 -40
-123,674
Rank: 42
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
58.3
33
4.4%
Rank: 22
MD U.S.
State Minimum Wage
$7.25 $1.68 No 0
1 17 50 34


www.alec.org
Massachusetts
41
6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
28
40% Rank: 38
MA U.S. Variable


2008 2009 2010 2011 2012 2013

22 26 32 24 25 29
Data 5.20% 8.00% $3.05 $37.94 $14.05 $11.72 Yes $0.64 10.8% 486.9 Rank 21 33 16 36 9 2 50 41 41 8
03
04
05
06
07
08
09
10
11
12
Property Tax Burden

10 0 -10 -20 -30 -40 -50 -60
Sales Tax Burden
-239,960
Rank: 43
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
66.3
19
1.7%
Rank: 36
MA U.S.
State Minimum Wage
$8.00 $1.37 No 1
39 7 50 14


Michigan
50
6% 4% 2% 0% -2% -4% -6%
12
13.8% Rank: 50
MI U.S. Variable


2008 2009 2010 2011 2012 2013

17 34 26 25 17 20
Data 6.65% 8.00% $2.27 $38.00 $26.54 $15.31 No -$0.72 8.9% 461.0 Rank 29 33 15 37 34 10 1 10 32 3

(in thousands)
0 -20 -40 -60 -80 -100 -120
-573,817
Rank: 47


4% 2% 0% -2% -4% -6% -8% -10% 03
63.0
27
-10%
Rank: 50
MI U.S.
State Minimum Wage

$7.40 $1.73 Yes 2
30 19 1 3

Number of Tax Expenditure Limits 04 05 06 07 08 09 10 11 12

www.alec.org
Minnesota
33
8% 6% 4% 2% 0% -2% -4%
46
46.2% Rank: 29
MN U.S. Variable


2008 2009 2010 2011 2012 2013

39 40 38 37 41 46
Data 9.85% 9.80% $18.27 $34.85 $20.29 $22.86 Yes $5.65 7.1% 519.1 Rank 45 45 45 31 21 41 50 50 15 19
03
04
05
06
07
08
09
10
11
12
Property Tax Burden

(in thousands)
0 -2 -4 -6 -8 -10 -12 -14
Sales Tax Burden
-64,954
Rank: 40


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
71.4
3.0%
Rank: 27
MN U.S.
State Minimum Wage
$7.25 $2.03 No 0
1 34 50 34


Mississippi
39
6% 4% 2% 0% -2% -4%
14
46.0% Rank: 30
MS U.S. Variable


2008 2009 2010 2011 2012 2013

19 19 18 19 15 10
Data 5.00% 5.00% $7.53 $27.25 $31.78 $20.37 No -$0.05 6.2% 640.9 Rank 17 9 24 15 41 32 1 22 10 45

10 5 0 -5 -10 -15 -20 -25
-32,013
Rank: 36
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
46.6
48
-1.1%
Rank: 44
MS U.S.
State Minimum Wage

$7.25 $1.49 Yes 2
1 9 1 3


www.alec.org
Missouri
Missouri
40
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
24
34.7% Rank: 46
MO U.S. Variable


2008 2009 2010 2011 2012 2013

25 23 15 9 7 23
Data 7.00% 6.16% $13.92 $26.31 $22.17 $16.05 No $0.00 9.2% 527.5 Rank 34 18 39 13 23 15 1 26 35 22

20 15 10 5 0 -5 -10 -15 -20
7,025
Rank: 28
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
57.8
34
-0.6%
Rank: 42
MO U.S.
State Minimum Wage

$7.50 $1.62 No 3
31 15 50 1

Montana
Montana
5
8% 6% 4% 2% 0% -2% -4%
43
70.0% Rank: 7
MT U.S. Variable


2008 2009 2010 2011 2012 2013

32 30 33 36 36 42
Data 6.90% 6.75% $17.72 $37.84 $0.00 $24.86 No -$0.14 6.4% 574.2 Rank 32 25 44 35 1 46 1 20 12 36

8 7 6 5 4 3 2 1 0
46,220
Rank: 19
(in thousands)

03
04
05
06
07
08
09
10
11
12

5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
52.2
45
11.7%
Rank: 6
MT U.S.
State Minimum Wage
$7.90 $2.50 No 0
35 43 50 34

www.alec.org
Nebraska
20
8% 6% 4% 2% 0% -2% -4%
35
62.2% Rank: 10
NE U.S. Variable


2008 2009 2010 2011 2012 2013

34 29 34 32 31 37
Data 6.84% 7.81% $18.43 $37.43 $22.02 $17.64 Yes $0.20 8.0% 652.0 Rank 31 31 46 34 22 22 50 36 22 47
03
04
05
06
07
08
09
10
11
12
Property Tax Burden Sales Tax Burden

1 0 -1 -2 -3 -4 -5 -6
-28,349
Rank: 35
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
74.1
6.1%
Rank: 16
NE U.S.
State Minimum Wage

$7.25 $1.71 Yes 0
1 18 1 34


Nevada
7
15% 10% 5% 0% -5%
8
61.4% Rank: 12
NV U.S.


2008 2009 2010 2011 2012 2013


Variable
7 7 11 17 18 13
Data 0.00% 0.00% $0.00 $29.91 $32.17 $36.70 No $0.00 10.6% 418.8 Rank 1 1 2 21 42 49 1 27 40 1
03
-10%
04
05
06
07
08
09
10
11
12

80 70 60 50 40 30 20 10 0 -10 -20
273,594
Rank: 8
(in thousands)

03
04
05
06
07
08
09
10
11
12

8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12%
57.0
37
8.3%
Rank: 13
NV U.S.
State Minimum Wage

$8.25 $1.33 Yes 2
44 5 1 3

www.alec.org
New Hampshire
34
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
32
38.4% Rank: 41
NH U.S. Variable


2008 2009 2010 2011 2012 2013

26 37 30 28 28 27
Data 0.00% 8.50% $0.00 $54.32 $0.00 $21.74 No -$0.02 9.5% 547.4 Rank 1 36 2 49 1 39 1 25 37 28
03
04
05
06
07
08
09
10
11
12
Sales Tax Burden

6 5 4 3 2 1 0 -1 -2 -3 -4
10,282
Rank: 27
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
65.7
21
3.0%
Rank: 28
NH U.S.
State Minimum Wage
$7.25 $2.40 No 0
1 42 50 34


New Jersey
48
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
45
34.8% Rank: 45
NJ U.S. Variable


2008 2009 2010 2011 2012 2013

48 46 48 45 42 39
Data 9.97% 9.00% $24.81 $55.54 $17.73 $14.49 Yes -$1.05 6.6% 551.6 Rank 46 40 48 50 13 6 50 7 13 29
03
04
05
06
07
08
09
10
11
12
Sales Tax Burden

(in thousands)
0 -10 -20 -30 -40 -50 -60 -70 -80 -90
-491,479
Rank: 46

60.1
32

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
-1.4%
Rank: 45
NJ U.S.
State Minimum Wage
$8.25 $2.74 No 1
44 44 50 14

www.alec.org
New Mexico
23
10% 8% 6% 4% 2% 0% -2% -4%
37
50.2% Rank: 24
NM U.S. Variable


2008 2009 2010 2011 2012 2013

27 25 35 39 35 33
Data 4.90% 7.30% $10.36 $19.38 $39.70 $15.51 No $0.18 8.0% 604.4 Rank 16 27 30 5 49 12 1 34 21 43

10 8 6 4 2 0 -2 -4 -6 -8
26,159
Rank: 23
(in thousands)


4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
52.7
44
4.9%
Rank: 20
NM U.S.
State Minimum Wage
$7.50 $1.88 No 0
31 24 50 34

New York
35
10% Cumulative 8% 6% 4% 2% 0% -2% -4%
50
46.6% Rank: 28
NY U.S. Variable


2008 2009 2010 2011 2012 2013

Growth 2002-2012
49 50 50 50 50 49
Data 12.70% 17.16% $12.53 $45.92 $24.27 $20.84 Yes $0.01 9.4% 603.8 Rank 49 50 34 44 30 34 50 30 36 42
Top Marginal Personal Income Tax Rate Top Marginal Corporate Income Tax Rate Personal Income Tax Progressivity Property Tax Burden Sales Tax Burden
03
04
05
06
07
08
09
10
11
12
Absolute Domestic Migration Cumulative 2003-2012 -1,527,359

(in thousands)
0 -50 -100 -150 -200 -250 -300
Rank: 50

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
66.4
18
4.4%
Rank: 21
NY U.S.
State Minimum Wage

$8.00 $2.82 No 0
39 46 50 34


www.alec.org
North Carolina
12
8% 6% 4% 2% 0% -2%
6
50.9% Rank: 22
NC U.S.


2008 2009 2010 2011 2012 2013


Variable
21 21 21 26 23 22
Data 5.80% 6.00% $5.80 $25.02 $23.97 $16.88 No -$0.46 7.2% 575.7 Rank 25 14 19 12 28 18 1 15 16 37
03 -4%
04
05
06
07
08
09
10
11
12

140 120 100 80 60 40 20 0
Sales Tax Burden
642,378
Rank: 3
(in thousands)

03
04
05
06
07
08
09
10
11
12

6% 4% 2% 0% -2% -4% -6% -8%
65.8
20
5.2%
Rank: 17
NC U.S.
State Minimum Wage

$7.25 $1.90 Yes 1
1 26 1 14


North Dakota
North Dakota
4
16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4%
4
125.1% Rank: 1


2008 2009 2010 2011 2012 2013


Variable
18 13 12 7 5 2
Data 3.22% 4.53% $9.01 $23.83 $29.47 $19.53 No -$3.78 3.9% 650.7
Rank 10 7 28 11 39 29 1 2 2 46
ND U.S.

12 Cumulative 2003-2012 10 8 6 4 2 0 -2 -4 -6
10,441
Rank: 26
(in thousands)


12% 10% 8% 6% 4% 2% 0% -2% -4% -6%
32.2%
Rank: 1
ND U.S.
69.8
State Minimum Wage

$7.25 $1.01 Yes 0
1 1 1 34


www.alec.org
Ohio
49
6% 4% 2% 0% -2% -4%
23
28% Rank: 49
OH U.S. Variable


2008 2009 2010 2011 2012 2013

8% Cumulative Growth 2002-2012
47 45 42 38 37 26
Data 7.89% 3.62% $12.88 $30.40 $18.66 $20.83 No -$1.97 7.2% 514.3 Rank 40 5 35 24 15 33 1 5 17 17
03
04
05
06
07
08
09
10
11
12
Property Tax Burden

0 -5 -10 -15 -20 -25 -30 -35 -40 -45 -50
Sales Tax Burden
-365,002
Rank: 45
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
62.1
30
-4.7%
Rank: 49
OH U.S.
State Minimum Wage

$7.95 $1.84 No 1
38 23 50 14


Oklahoma
9
12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -10% 03 -8%
21
62.9% Rank: 9
OK U.S. Variable


2008 2009 2010 2011 2012 2013

14 15 14 14 14 19
Data 5.25% 6.00% $7.84 $15.74 $27.74 $16.26 No $0.00 6.9% 566.3 Rank 22 14 27 2 36 16 1 29 14 35
Top Marginal Personal Income Tax Rate Top Marginal Corporate Income Tax Rate Personal Income Tax Progressivity Property Tax Burden 04 05 06 07 08 09 10 11 12 Sales Tax Burden

Cumulative 2003-2012 25
20 15 10 5 0 -5 -10
67,198
Rank: 17
(in thousands)


4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
55.0
42
8.5%
Rank: 12
OK U.S.
State Minimum Wage

$7.25 $2.77 Yes 2
1 45 1 3


www.alec.org
Oregon
13
Cumulative 14%
12% 10% 8% 6% 4% 2% 0% -2% -4%
42
66.2% Rank: 8
OR U.S. Variable


2008 2009 2010 2011 2012 2013

Growth 2002-2012
35 39 41 43 45 44
Data 10.62% 11.25% $15.41 $35.64 $0.00 $21.38 Yes $0.88 8.9% 509.6 Rank 47 48 41 33 1 36 50 42 31 14
03
04
05
06
07
08
09
10
11
12

35 30 25 20 15 10 5 0
166,474
Rank: 11
(in thousands)


6% 4% 2% 0% -2% -4% -6% -8%
62.6
28
3.7%
Rank: 23
OR U.S.
State Minimum Wage

$9.10 $1.58 No 2
49 12 50 3


Pennsylvania
37
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
33
41.7% Rank: 36
PA U.S. Variable


2008 2009 2010 2011 2012 2013

36 42 43 41 40 34
Data 7.00% 17.05% $0.00 $30.40 $17.55 $24.46 Yes -$2.66 8.6% 467.7 Rank 33 49 2 25 12 44 50 3 28 6
03
04
05
06
07
08
09
10
11
12
Sales Tax Burden

10
-26,848
Rank: 32
(in thousands)
5 0 -5 -10 -15 -20


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
56.3
39
1.9%
Rank: 35
PA U.S.
State Minimum Wage

$7.25 $2.15 No 0
1 39 50 34


www.alec.org
Rhode Island
47
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
41
33.6% Rank: 48
RI U.S. Variable


2008 2009 2010 2011 2012 2013

45 48 45 42 43 45
Data 5.99% 9.00% $11.40 $49.18 $17.84 $17.70 Yes $0.15 11.0% 471.0 Rank 26 40 32 47 14 23 50 33 42 7
03
04
05
06
07
08
09
10
11
12

4 2 0 -2 -4 -6 -8 -10 -12
Sales Tax Burden
-63,806
Rank: 39
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
60.9
31
-3.3%
Rank: 48
RI U.S.
State Minimum Wage

$8.00 $1.99 No 1
39 31 50 14


South Carolina
22
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
31
41.7% Rank: 37
SC U.S. Variable


2008 2009 2010 2011 2012 2013

20 20 31 22 27 31
Data 7.00% 5.00% $16.00 $30.82 $20.21 $17.10 No -$0.04 13.3% 540.8 Rank 35 9 43 26 20 20 1 23 49 25
03
04
05
06
07
08
09
10
11
12
Sales Tax Burden

60 50 40 30 20 10 0
(in thousands)
318,593
Rank: 6


3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
56.3
39
3.5%
Rank: 24
State Minimum Wage

$7.25 $2.04 Yes 1
1 35 1 14

SC U.S.

www.alec.org
South Dakota
15
8% 6% 4% 2% 0% -2% -4%
2
53.8% Rank: 17
SD U.S.


2008 2009 2010 2011 2012 2013


Variable
2 5 4 2 2 3
Data 0.00% 0.00% $0.00 $27.95 $31.26 $16.95 No $0.00 8.2% 552.0
Rank 1 1 2 18 40 19 1 28 24 30
03
04
05
06
07
08
09
10
11
12

4.5 4.0 3.5 3.0 2.5 2.0 1.0 1.0 0.5 0
Sales Tax Burden
16,932
Rank: 24
(in thousands)

03
04
05
06
07
08
09
10
11
12

3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
69.5
10
9.8%
Rank: 7
SD U.S.
State Minimum Wage

$7.25 $1.91 Yes 1
1 28 1 14


Tennessee
25
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
19
43.5% Rank: 33
TN U.S. Variable


2008 2009 2010 2011 2012 2013

3 9 10 8 12 18
Data 0.00% 6.50% $0.00 $22.06 $35.21 $19.75 Yes $0.09 8.7% 512.0 Rank 1 21 2 8 44 30 50 32 30 15
03
04
05
06
07
08
09
10
11
12
Sales Tax Burden

60 50 40 30 20 10 0
282,763
Rank: 7
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
63.7
26
2.3%
Rank: 33
State Minimum Wage

$7.25 $2.02 Yes 1
1 32 1 14

TN U.S. 03 04 05 06 07 08 09 10 11 12
Number of Tax Expenditure Limits

www.alec.org
Texas
1
12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8%
13
78.5% Rank: 4
TX U.S. Variable


2008 2009 2010 2011 2012 2013

13 10 19 18 16 12
Data 0.00% 2.65% $0.00 $39.22 $23.10 $21.05 No -$0.39 12.1% 565.2 Rank 1 4 2 39 25 35 1 17 48 34
03
04
05
06
07
08
09
10
11
12

250 200 150 100 50 0
Sales Tax Burden
1,041,977
Rank: 1
(in thousands)


4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6.0%
57.2
35
16.9%
Rank: 3
State Minimum Wage
$7.25 $1.60 Yes 1
1 13 1 14

TX U.S.

Utah
2
12% 10% 8% 6% 4% 2% 0% -2% -4%
1
74.9% Rank: 5
UT U.S.


2008 2009 2010 2011 2012 2013


Variable
1 1 1 1 1 1
Data 5.00% 5.00% $0.00 $27.37 $26.19 $15.20 No $0.19 7.7% 523.1
Rank 17 9 2 16 33 9 1 35 20 20
03
04
05
06
07
08
09
10
11
12
Property Tax Burden

25 20 15 10 5 0 -5 -10
Sales Tax Burden
63,532
Rank: 18
(in thousands)

03
04
05
06
07
08
09
10
11
12

6% 4% 2% 0% -2% -4% -6% -8%
69.7
17.7%
Rank: 2
UT U.S.
State Minimum Wage

$7.25 $1.35 Yes 1
1 6 1 14


www.alec.org
Vermont
36
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
49
39.3% Rank: 40
VT U.S. Variable


2008 2009 2010 2011 2012 2013

50 49 49 49 49 50
Data 8.95% 8.50% $28.56 $52.97 $12.90 $29.57 Yes $1.12 5.5% 632.6 Rank 43 36 49 48 7 48 50 45 6 44

5 0 -5 -1 -1 -2
-5,973
Rank: 29
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
67.1
16
2.4%
Rank: 32
VT U.S.
State Minimum Wage

$8.73 $2.07 No 0
48 37 50 34

Virginia
14
Cumulative 10%
8% 6% 4% 2% 0% -2% -4%
11
53.3% Rank: 19
VA U.S. Variable


2008 2009 2010 2011 2012 2013

Growth 2002-2012
5 4 8 3 3 5
Data 5.75% 7.55% $6.45 $29.92 $12.06 $16.51 No $1.01 8.3% 542.7
Rank 24 30 21 22 6 17 1 44 25 26
03
04
05
06
07
08
09
10
11
12

45 40 35 30 25 20 15 10 5 0 -5
Sales Tax Burden
139,202
Rank: 12
(in thousands)


4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
70.2
7.1%
Rank: 15
VA U.S.
State Minimum Wage

$7.25 $1.20 Yes 0
1 4 1 34


www.alec.org
Washington
6
10% 8% 6% 4% 2% 0% -2% -4%
38
58.5% Rank: 13
WA U.S. Variable


2008 2009 2010 2011 2012 2013

30 22 24 33 33 36
Data 0.00% 6.45% $0.00 $29.42 $33.57 $23.02 Yes $0.41 11.5% 500.0 Rank 1 20 2 20 43 42 50 38 45 12
03
04
05
06
07
08
09
10
11
12

60 50 40 30 20 10 0
Sales Tax Burden
249,650
Rank: 9
(in thousands)

03
04
05
06
07
08
09
10
11
12

4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7%
65.4
22
8.6%
Rank: 11
WA U.S.
State Minimum Wage

$9.32 $2.11 No 1
50 38 50 14


West Virginia
18
6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
30
55.8% Rank: 14
Variable


2008 2009 2010 2011 2012 2013

38 33 27 31 30 32
Data 6.50% 6.50% $15.53 $23.48 $19.89 $29.19 No -$0.41 5.2% 555.9 Rank 28 21 42 10 18 47 1 16 4 31
Top Marginal Personal Income Tax Rate WV U.S. Top Marginal Corporate Income Tax Rate Personal Income Tax Progressivity Property Tax Burden 03 04 05 06 07 08 09 10 11 12 Sales Tax Burden

5 4.5 4 3.5 3 2.5 2 1.5 1 .5
26,328
Rank: 22
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
44.8
50
5.0%
Rank: 18
WV U.S.
State Minimum Wage

$7.25 $1.55 No 0
1 11 50 34


www.alec.org
Wisconsin
44
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
17
37.5% Rank: 43
WI U.S. Variable


2008 2009 2010 2011 2012 2013

33 27 23 30 32 15
Data 7.65% 7.90% $3.93 $43.29 $19.55 $17.86 No -$1.37 7.3% 489.5 Rank 38 32 17 40 16 24 1 6 18 9
03
04
05
06
07
08
09
10
11
12
Sales Tax Burden

4 Cumulative 2003-2012 2 0 -2 -4 -6 -8 -10 -12
-39,812
Rank: 37
(in thousands)


3% 2% 1% 0% -1% -2% -3% -4% -5% -6%
68.4
15
0.2%
Rank: 40
WI U.S.
State Minimum Wage
$7.25 $2.15 No 2
1 39 50 3


Wyoming
3
20% 15% 10% 5% 0% -5% -10% -15% 03
10
99.5% Rank: 2
WY U.S. Variable


2008 2009 2010 2011 2012 2013

4 6 6 4 4 4
Data 0.00% 0.00% $0.00 $46.01 $39.17 $13.13 No $2.47 3.0% 918.2 1 1 2 45 48 5 1 48 1 50
Rank
04
05
06
07
08
09
10
11
12
Sales Tax Burden

8 7 6 5 4 3 2 1 0 -1
29,112
Rank: 21
(in thousands)


8% 6% 4% 2% 0% -2% -4% -6% -8%
72.6
16.6%
Rank: 4
WY U.S.
State Minimum Wage

$7.25 $1.74 Yes 0
1 20 1 34


www.alec.org
APPENDIX
Appendix
2014 ALEC-Laffer State Economic Competitiveness Index: Economic Outlook Methodology
n previous editions of this report we introduced 15 policy variables that have a proven impact on the migration of capitalboth investment and humaninto and out of states. The end result of an equally weighted combination of these variables is the 2014 ALEC-Laffer Economic Outlook rankings of the states. Each of these factors is influenced directly by state lawmakers through the legislative process. The 15 factors and a basic description of their purposes, sourcing, and subsequent calculation methodologies are as follows: HIGHEST MARGINAL PERSONAL INCOME TAX RATE This ranking includes local taxes, if any, and any impact of federal deductibility, if allowed. A states largest city was used as a proxy for local tax rates. Data were drawn from: Tax Analysts, Tax Administrators, and individual state tax return forms. Tax rates are as of January 1, 2014. HIGHEST MARGINAL CORPORATE INCOME TAX RATE This variable includes local taxes, if any, and includes the effect of federal deductibility, if allowed. A states largest city was used as a proxy for local tax rates. In the case of gross receipts or business franchise taxes, an effective tax rate was approximated using NIPA profits, rental and proprietors income, and gross domestic product data. The Texas Franchise tax is not a traditional gross receipts tax, but is instead a margin tax with more than one rate. A margin tax creates less distortion than does a gross receipts tax. Therefore, what we believe is the best measurement for an effective corporate tax rate for Texas is to average the 4.3 percent measure we would use if the tax was a gross receipts tax and the 1 percent highest rate on its margin tax, leading to our measure of 2.65 percent. Data were drawn from: Tax Analysts, Tax Administrators, individual state tax return forms, and the Bureau of Economic Analysis. Tax rates are as of January 1, 2014. PERSONAL INCOME TAX PROGRESSIVITY This variable was measured as the difference between the average tax liability per $1,000 at incomes of $50,000 and $150,000. The tax liabilities were measured using a combination of effective tax rates, exemptions, and deductions at both state and federal levels, which are calculations from Laffer Associates. PROPERTY TAX BURDEN This variable was calculated by taking tax revenues from property taxes per $1,000 of personal income. We have used U.S. Census Bureau data, for which the most recent year available is 2011. These data were released in July 2013. SALES TAX BURDEN This variable was calculated by taking tax revenues from sales taxes per $1,000 of personal income. Sales taxes taken into consideration include the general sales tax and specific sales taxes. We have used U.S. Census Bureau Data, for which the most recent year available is 2011. Where appropriate, gross receipts or business franchise taxes, counted as sales taxes in the Census data, were subtracted from a states total sales taxes in order to avoid double-counting tax burden in a state. These data were released in July 2013. REMAINING TAX BURDEN This variable was calculated by taking tax revenues from all taxesexcluding personal income, corporate income (including corporate license), property, sales, and severance per $1,000 of personal income. We used U.S. Census Bureau Data, for which the most recent year available is 2011. These data were released in July 2013. ESTATE OR INHERITANCE TAX (YES OR NO) This variable assesses if a state levies an estate or inheritance tax. We chose to score states based on either a yes for the presence of a state-level
estate or inheritance tax, or a no for the lack thereof. Data were drawn from: McGuire Woods LLP, State Death Tax Chart: Revised January 1, 2014, and indicate the presence of an estate or inheritance tax as of January 1, 2014. RECENTLY LEGISLATED TAX CHANGES This variable calculates each states relative change in tax burden over a two-year period (in this case, the 2012 and 2013 legislative session) for the immediate next fiscal year, using revenue estimates of legislated tax changes per $1,000 of personal income. This timeframe ensures that tax changes will impact a states ranking immediately enough to overcome any lags in the tax revenue data. Laffer Associates calculations used raw data from Tax Analysts, state legislative fiscal notes, state budget offices, state revenue offices, and other sources. DEBT SERVICE AS A SHARE OF TAX REVENUE Interest paid on debt as a percentage of total tax revenue. This information comes from 2011 U.S. Census Bureau data. These data were released in July 2013. PUBLIC EMPLOYEES PER 10,000 RESIDENTS This variable shows the full-time Equivalent Public Employees per 10,000 of Population. This information comes from 2012 U.S. Census Bureau data. QUALITY OF STATE LEGAL SYSTEM This variable ranks tort systems by state. Information comes from the 2012 U.S. Chamber of Commerce State Liability Systems Ranking.
STATE MINIMUM WAGE Minimum wage enforced on a state-by-state basis. If a state does not have a minimum wage, we use the federal minimum wage floor. This information comes from the U.S. Department of Labor, as of January 1, 2014. WORKERS COMPENSATION COSTS This variable highlights the 2012 Workers Compensation Index Rate (cost per $100 of payroll). This survey is conducted biennially by the Oregon Department of Consumer & Business Services, Information Management Division. RIGHT-TO-WORK STATE (YES OR NO) This variable assesses whether or not a state requires union membership for its employees. We have chosen to score states based on either a yes for the presence of a right-to-work law or a no for the lack thereof. This information comes from the National Right to Work Legal Defense and Education Foundation, Inc. Right-to-work status is as of January 1, 2014. TAX OR EXPENDITURE LIMIT States were ranked only by the number of state tax or expenditure limits in place. We measure this by i) a state expenditure limit, ii) mandatory voter approval of tax increases, and iii) a supermajority requirement for tax increases. One point is awarded for each type of tax or expenditure limitation a state has. All tax or expenditure limitations measured apply directly to state government. This information comes from the Cato Institute and other sources.
www.alec.org
About the American Legislative Exchange Council

he American Legislative Exchange Council is Americas largest nonpartisan, voluntary membership organization of state legislators. Made up of nearly one-third of Americas state elected officials, the Council provides a unique opportunity for state lawmakers, business leaders and citizen organizations from around the country to share experiences and develop statebased, pro-growth models based on academic research, existing state policy and proven business practices. The ultimate goal of the Exchange Council is to help state lawmakers make government work more efficiently and move government closer to the communities they serve, thereby creating opportunity for all Americans. In state legislatures around the country, citizen groups foster ideas, participate in discussions and provide their points of view to lawmakers. This process is an important part of American Democracy. The Exchange Council and its nine task forces closely imitate the state legislative process: resolutions are introduced and assigned to an appropriate task force based on subject and scope; meetings are conducted where experts present facts and opinion for discussion, just as they would in committee hearings; these discussions are followed by a vote. Council task forces serve as testing grounds to judge whether resolutions can achieve consensus and enough support to survive the legislative process in a state capitol. All adopted model policies are published at www.alec.org to promote increased education and the open exchange of ideas across America. The Exchange Councils Nine Task Forces and Issue Areas Include:
TASK FORCE ON COMMERCE, INSURANCE AND ECONOMIC DEVELOPMENT

Limiting Government Mandates on Business Transportation and Infrastructure Employee Rights and Freedoms
TASK FORCE ON ENERGY, ENVIRONMENT AND AGRICULTURE

Energy Affordability and Reliability Regulatory Reform Agriculture and Land Use
TASK FORCE ON EDUCATION

Education Reform Parental Choice Efficiency, Accountability and Transparency
TASK FORCE ON HEALTH AND HUMAN SERVICES

Pro-Patient, Free Market Health Policy Private and Public Health Insurance Federal Health Reform
TASK FORCE ON INTERNATIONAL RELATIONS

International Trade Intellectual Property Rights Protection Federalism
TASK FORCE ON TAX AND FISCAL POLICY

Pro-Growth Tax Reform Priority-Based Budgeting Pension Reform
TASK FORCE ON COMMUNICATIONS AND TECHNOLOGY

Broadband Deployment Consumer Privacy E-Commerce
TASK FORCE ON CIVIL JUSTICE

Civil Liability Predictability Fairness in Damages Discouraging Lawsuit Abuse
JUSTICE PERFORMANCE PROJECT

Recidivism Reduction Overcriminalization Data-Driven Criminal Justice Reform

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ALEC-Laffer State Economic Competitiveness Index

Rich States, Poor States

Arthur B. Laffer Stephen Moore Jonathan Williams

Rich States, Poor States

Table 1 | ALEC-Laffer State Economic Outlook Rankings, 2014

Rich States, Poor States

2014 ALEC-LAFFER STATE ECONOMIC COMPETITIVENESS INDEX

Table 2 | ALEC-Laffer State Economic Performance Rankings, 2002-2012

2014 ALEC-LAFFER STATE ECONOMIC COMPETITIVENESS INDEX

Economic Performance Rank

Economic Outlook Rank

Economic Performance Rank (1=best 50=worst)

Economic Outlook Rank (1=best 50=worst)

State Gross Domestic Product

ECONOMIC OUTLOOK RANK

Personal Income Tax Progressivity

Property Tax Burden 03 04 05 06 07 08 09 10 11 12 Sales Tax Burden

(per $1,000 of personal income)

Absolute Domestic Migration

(per $1,000 of personal income)

(per $1,000 of personal income)

Remaining Tax Burden

Estate/Inheritance Tax Levied?

Recently Legislated Tax Changes

Non-Farm Payroll Employment

State Liability System Survey

State Minimum Wage

$7.25 $1.97 Yes 0

Average Workers Compensation Costs

(option to join or support a union)

Number of Tax Expenditure Limits 03 04 05 06 07 08 09 10 11 12

Rich States, Poor States

2014 ALEC-LAFFER STATE ECONOMIC COMPETITIVENESS INDEX

Economic Performance Rank

Economic Outlook Rank

Economic Performance Rank (1=best 50=worst)

Economic Outlook Rank (1=best 50=worst)

State Gross Domestic Product

ECONOMIC OUTLOOK RANK

(per $1,000 of personal income)

Absolute Domestic Migration

Sales Tax Burden

(per $1,000 of personal income)

Remaining Tax Burden

(per $1,000 of personal income)

Estate/Inheritance Tax Levied? Recently Legislated Tax Changes

Non-Farm Payroll Employment

State Minimum Wage

(per $100 of payroll)

Average Workers Compensation Costs

(option to join or support a union)

Number of Tax Expenditure Limits 03 04 05 06 07 08 09 10 11 13

2014 ALEC-LAFFER STATE ECONOMIC COMPETITIVENESS INDEX

Economic Performance Rank

Economic Outlook Rank

Economic Performance Rank (1=best 50=worst)

Economic Outlook Rank (1=best 50=worst)

State Gross Domestic Product

ECONOMIC OUTLOOK RANK

Personal Income Tax Progressivity

Property Tax Burden 03 04 05 06 07 08 09 10 11 12 Sales Tax Burden

(per $1,000 of personal income)

Absolute Domestic Migration

(per $1,000 of personal income)