In our federalist system, states compete. That simple fact should be a primary influence on public policy in state legislatures.


The prosperity of a state is largely contingent on its tax climate and spending restraint. If a state can reign in spending and promote a pro-growth tax policy then it can expect to flourish, but if state government is allowed to grow unchecked, squeezing the private sector and chasing its tax base across state lines, it can expect to find itself in the same hole as New York, Vermont, New Jersey, Illinois, and California.
The American Legislative Exchange Council (ALEC) has released the third edition of Rich States, Poor States which not only details the fiscal and economic policies of states in the U.S., but outlines the disastrous response to the country’s economic crisis. Most states have unfortunately decided to raise taxes to make up for lost revenue and to fund all sorts of wasteful spending, not only raising taxes but raising the cost of doing business. Once this cost is raised people vote with their feet, leaving for a less overbearing state government.
Jonathan Williams, director of ALEC’s Tax and Fiscal Policy Task Force sums it up thusly:
The correlation between poor policy and poor economic results is indisputable, just look at California, New Jersey, and New York. Our research shows that states with responsible spending and competitive tax rates enjoy the best economic outlook. States do not enact changes in a vacuum – every time they increase the cost of doing business in their state, their state brand immediately loses value.
Top Five States    
Bottom Five States
1. Utah               46. California
2. Colorado          47. Illinois
3. Arizona      48. New Jersey
4. South Dakota 49. Vermont     
5. Florida    50. New York


To view ALEC’s state index Rich States, Poor States click here.