Texas in top 10 best economic outlook rankings in the U.S. according to a new publication, Rich States/Poor States - State Economic Competitiveness Index 2007.

This economic rating of the 50 states shows that those states with the lowest taxes, government spending, and regulatory burdens attract the most newcomers.

Houston has long understood the precepts purported in this study. I found an interesting article published June 14, 1916 (yes, 1916!) by the New York Times, Houston Tax Plan Brings Prosperity. The article quoted J. J. Pastoriza, Tax and Finance Commissioner of Houston:


"Never tax anything which is produced by the industry, enterprise, or ingenuity of man, because to do so will tend to decrease the sum and increase the cost of such products. The fewer restrictions, both as to taxes and regulation, which a city places upon business or products, the faster, greater, and wealthier will that city grow. The power to tax is the power to destroy as well as the power to build up. Houston decided to use this power to construct and build a great city, rather than to retard or destroy one."
Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, had half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states.

In 2006 alone 1,500 people EVERY DAY moved to the states with the highest economic competitiveness from the states with the lowest competitiveness.

Of all the policy variables examined, two stand out as perhaps the most important in attracting jobs and capital. The first is the income tax rate:

States with the highest income tax rates -- California and New York, for example -- are significantly outperformed by the nine states with no income tax, such as Texas and Florida.

The other factor for attracting jobs and capital is right-to-work laws: States that permit workers to be compelled to join unions have much lower rates of employment growth than states that don't.

Many companies say they will not even consider locating a factory in a state that does not have a right-to-work law.

The study also finds that states with antigrowth tax and spending policies don't just lose people. Noncompetitive states like New York, Michigan, Pennsylvania, Illinois and New Jersey are also plagued by falling housing values, a shrinking tax base, business outmigration, capital flight and high unemployment rates, and less money for schools, roads and aging infrastructure.

As you will note by reading the full report, which can be accessed using the link below, the "Poor States," those that are declining and are the bottom dwellers of the competitive index rankings are all led by liberal democrat governments. Those that claim to represent the poor and disenfranchised, hurt their own constituents the most.

Source: Rich States, Poor States
State Economic Competitiveness Index 2007
American Legislative Exchange Council(ALEC)
By Arthur B. Laffer, president of Laffer Associates, and Stephen Moore, senior economics writer for the Wall Street Journal.