Utah tops economic competitiveness report again
From: The Center Square
Utah tops the American Legislative Exchange Council’s (ALEC) list of the country’s most competitive states for the 15th year in a row.
The annual report bases its rankings on 15 factors including the state’s tax burden, legal system, minimum wage, size of government and public debt.
“Utah has a strong track record of pro-taxpayer reforms in recent years, including the adoption of a flat personal income tax rate, pension reform for its previously endangered system, and the state’s innovative approach to property tax reform,” the authors wrote.
The state ranked second for economic performance.
The review showed over 97,000 people have moved to Utah between 2011 and 2020. The most significant uptick in migration took place between 2016 and 2020.
“Americans continue to vote with their feet toward states that have lower tax burdens and value economic competitiveness,” said Jonathan Williams, ALEC chief economist and one of the authors of the review.
Utah’s top marginal personal and corporate income tax rate, which represented any local taxes and impact of federal deductibility, was 4.9%. Its personal income tax progressivity, which is the change in tax liability per $1,000 of income, was $0.32 and ranked 12th.
Utah lawmakers enacted several pro-taxpayer reforms in the past few years including a flat rate income tax.
“If you believe incentives matter, and I do, state policies have the effect of changing those incentives at both the state and local levels,” said Dr. Arthur Laffer, a co-author of the report. “Those changes in incentives have consequences.”
The state’s property tax burden per $1,000 of personal income was $24.31, which was 14th overall. The sales tax burden, also per $1,000 of personal income, was $25.18, and the remaining tax burden was $16.10 per $1,000 of income, according to the report.
Utah does not levy an estate or inheritance tax.
The state’s tax expenditure limit, which measures the influence of tax and expenditure limits on state tax revenue and spending, ranked 15th.
Overall, the review showed the most significant ways states succeed in attracting new residents are cutting taxes, paying down debt and maintaining free market policies, according to the report.
“This study has had a big impact on what state officials, governors and legislators are doing,” said Stephen Moore, one of three authors of the report. “This is a magic moment for tax reform at the state level. I think even in some of these blue states that have been traditionally very liberal, they’re looking at reforms that could really make their states more prosperous. I think the direction is good, and I think a lot of that direction is a result of the Rich State, Poor State rankings.
Other states that made the top five were North Carolina, Arizona, Oklahoma, and Idaho. At the bottom were Minnesota, Vermont, California, New Jersey, and New York.