Shawn Vestal authored a May 2 attack piece on the American Legislative Exchange Council’s report, “Rich States, Poor States.” It is clear he misunderstood the report and our state ranking system.
Economic outlook – based on 15 equally weighted policy variables, including various tax burdens, labor policies, and spending – is a forecast showing how a state might fare in the future given its current policies. Undoubtedly, outlook will improve over time as a state enacts changes. These changes are not immediate, however, explaining why the performance rank is not synonymous with the outlook rank. Performance looks at personal income per capita, absolute domestic migration, and non-farm payroll employment to show how states performed over the past decade.
Vestal claims per-capita income levels highlight the relative prosperity of states. To address this deeply flawed measure of state success, let’s consider a hypothetical example. As Vestal points out in his column, per-capita income in New York is $50,545. Now, assume that a 99 percent tax rate drove everyone in New York elsewhere, with the exception of one person, Donald Trump. New York’s per-capita income would skyrocket. However, would any rational policy analyst argue this was a successful policy? We’d argue no.
Tax and Fiscal Policy Task Force director
American Legislative Exchange Council