‘Rich States, Poor States:’ How Does Georgia Rank? How Can It Improve?

September 23rd, 2011 by 2 Comments

By Jonathan Williams and Kailee Tkacz

Three years after the economic downturn, many wonder: What are the key drivers for growth in Georgia and what can be done to make the state more fiscally competitive?

 

The latest edition of the American Legislative Exchange Council’s “Rich States, Poor States,” uses 2010 census data to explain why some states have prospered in the last decade while others have continued to suffer economic decline. Through statistical and anecdotal evidence, the analysis makes a compelling case that pro-growth economic policy is what really makes the difference in achieving long-term growth in Georgia.

 

The fourth edition of “Rich States, Poor States” outlines two sets of state rankings. The first ranks economic performance based on the past 10 years of economic data such as income, population and job growth. The second ranks economic outlook by using 15 policy variables that include tax and regulatory burdens, recently legislated tax changes and labor policy.

 

So, where does the Peach State rank compared to other states?

 

The 2011 ALEC-Laffer State Economic Competitiveness Index ranks Georgia 33rd in the nation for economic performance and 11th for economic outlook.

 

Georgia levies no inheritance or estate tax. It’s a right-to-work state and keeps its minimum wage at the federal floor level of $7.25.These factors give Georgia an overwhelmingly competitive economic advantage in comparison to many other states across the nation.

In addition, Georgia keeps its excise taxes low relative to neighboring states. Georgia has the lowest cigarette tax at 37 cents per pack in the Southeast region and the second lowest gas tax, at 20.8 cents per gallon. By keeping tax rates lower than surrounding states, Georgia proves that it is open and ready for business.    

 

While Georgia fares relatively well, research in neighboring states such as Florida and Tennessee (eighth), which both have no personal income tax.


Georgia Tennessee Florida Alabama
Economic Outlook Rank

11

8

10

20

Economic Performance Rank

33

36 8

23

If Georgia wishes to compete against its neighbors, it should follow their lead and seriously consider repealing the state’s personal income tax. To further attract businesses, Georgians should also consider lowering the corporate income tax rate.

 

Georgia needs to remember that no state has ever taxed, borrowed or spent its way to prosperity. “Rich States, Poor States” shows that states that allow the government to heavily interfere with economic transactions through increased tax rates, burdensome regulations and bloated spending have lost economic vitality. Many states have even seen taxpayers migrate to states with lower taxes and more competitive business climates.

 

The beauty of the American experiment is that there are 50 “laboratories of democracy” that can replicate the policies that have worked and avoid those that have failed. “Rich States, Poor States” offers solutions on how to tackle budget deficits without raising taxes, what to do about underfunded state pension systems and how to encourage the creation of new businesses and private-sector jobs. The book delivers reliable facts and detailed analysis that can help Georgia policy-makers revitalize the state’s economy through free-market, limited government principles.

Like any other state, Georgia holds its economic future in its own hands. By creating an environment where businesses can invest, develop and create jobs, Georgia can lead the way for economic competitiveness not only in the Southeast, but also across the nation.

Georgia’s economic rankings will continue to improve over the next few years, given the recently launched Georgia Competitiveness Initiative that is uniting state agencies and the business community in seeking innovative solutions for long-term economic growth and job creation.

 

To learn more about the policies that will lead to growth and prosperity in Georgia, register for the 2011 Georgia Legislative Policy Briefing on September 30, 2011. Find the fourth edition of “Rich States, Poor States.” at http://www.alec.org.


Jonathan Williams is co-author of “Rich States, Poor States” and Tax and Fiscal Policy Task Force Director at the American Legislative Exchange Council (ALEC). Kailee Tkacz is an ALEC Research Analyst. This commentary was written for the Georgia Public Policy, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. © Georgia Public Policy Foundation (September 23, 2011). Permission to reprint in whole or in part is hereby granted, provided the authors and their affiliations are cited.

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