Thanks to its zero percent personal income tax rate, lack of a death tax, and relatively few government regulations on businesses, Florida is back in the top 10 among states in terms of its economic outlook, according to a report published Thursday by the American Legislative Exchange Council (ALEC).
Florida ranks ninth in the nation in economic outlook in the sixth annual Rich States, Poor States report, the second highest position it has ever held since this research and its ALEC-Laffer State Economic Competitiveness Index have been published. The state ranked 13th in 2012, 10th in 2011, and fifth in 2010.
The reasons that Florida is in the top 10 include its having no personal income tax, no death tax, keeping the size of government more limited than most other states, being a right-to-work state, and putting limits on the growth of government, economist Jonathon Williams, one of the report's three co-authors, tells Sunshine State News. Those are things playing to Florida's advantage in keeping the state competitive.
But certainly everything is not rosy, he cautions, referring to Florida's higher-than-average sales and property tax rates, a highly litigious legal climate in desperate need of tort reform, as well as the state's failure, despite House Speaker Will Weatherford's concerted efforts in the last session, to enact meaningful pension reform.
Making changes in those areas would certainly cement Floridas place in the top 10 for years to come, he says.
Asked to explain why Florida's economic outlook has shifted so dramatically over the last six years, Williams emphasizes that sometimes what a state doesn't do is as important as what it does.
Sometimes states can fall behind by standing still, he says. That was probably the case when Florida fell down in the rankings. Other states crept up and became more competitive, which is just as dangerous, of course, to your future outlook as a state for job creation and growth, when you allow other states to surpass you with their competitiveness-enhancing policies.
The report's "economic outlook" is a competitiveness ranking that predicts, on the basis of 15 variables (tax rates, regulatory burdens, and labor policies), how economically competitive a state will be over the next several years. Williams, along with report co-authors Arthur B. Laffer and Stephen Moore, argues that these variables have proven to be influential in determining whether a state's economy grows.
Nationally, states with low tax rates, limited government regulations, and right-to-work laws were most likely to have a better economic outlook than states with high income taxes and burdensome regulations, reads a press release accompanying Rich States, Poor States, summarizing its findings. The report shows that over a 10-year period, the nine states without personal income taxes have outperformed the nine states with the highest income tax rates in population, job, and revenue growth.
The nine other top states for economic outlook were Utah (maintaining its No. 1 spot for the sixth year in a row), North Dakota, South Dakota, Wyoming, Virginia, Arizona, Idaho, Georgia, and -- after Florida -- Mississippi.
The states with the worst economic outlook are Maine, Montana, Connecticut, Oregon, Rhode Island, Minnesota, California, Illinois, New York, and worst of all Vermont.
The report dedicates an entire chapter to California a bastion of far-left Democratic economic policy and its many fiscal woes.
Reach Eric Giunta at egiunta@sunshinestatenews.com or at (954) 235-9116.
