WASHINGTON – Rhode Island’s economic outlook ranked No. 45 among the 50 states according to the 2013 ALEC-Laffer State Economic Competitiveness Index released by the American Legislative Exchange Council. Rhode Island’s No. 45 rank represented a slip from last year’s report, in which the Ocean State ranked No. 43.
The annual report is authored by economist Arthur B. Laffer, Wall Street Journal Senior Economics Writer Stephen Moore and Jonathan Williams, director of ALEC’s Center for State Fiscal Reform.
This sixth edition of the report ranks the 2013 economic outlook of states using 15 equally-weighted policy variables, including: tax rates, regulatory burdens and labor policies.
Among the rated variables, Rhode Island earned relatively high rankings in public employees per 10,000 of population (No. 7), sales tax burden (No. 14), number of tax expenditure limits (No. 15) and remaining tax burden (No. 23).
The Ocean State fared poorly as a right-to-work state, which gives an option as to whether to join or support a union, and whether estate/inheritance tax was levied, ranking No. 50 in both of those categories.
Rhode Island also scored poorly in the recently legislated tax changes category (No. 47), property tax burden (No. 46), debt service as a share of tax revenue (No. 42) and top marginal corporate income tax rate (No. 40).
“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,” said the report. Adding that over a ten-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.
Utah ranked No. 1, with North Dakota, South Dakota, Wyoming and Virginia rounding out the top five. Vermont was listed as the state with the worst economic outlook in 2013, with New York, Illinois, California and Minnesota ranked No. 49 to No. 46, respectively.
Neighboring Massachusetts earned the No. 29 economic outlook rank in the ALEC-Laffer report, ranking in the top 10 for variable industries remaining tax burden (No. 2); average workers’ compensation costs (No. 7); public employees per 10,000 of population (No. 8); and sales tax burden, (No. 9).
The report also listed the states’ economic performance rank, a “backward-looking measure” based on the state’s performance in three important variables: state gross domestic product, absolute domestic migration and non-farm payroll employment.
With its high unemployment rate, Rhode Island ranked No. 47 in the non-farm payroll employment variable, No. 38 in absolute domestic migration and No. 37 in state gross domestic product.
Regardless of its much highest ranking on the economic outlook list, Massachusetts ranked behind Rhode Island on the economic performance ranking at No. 45. The Bay State ranked No. 43 in absolute domestic migration, No. 42 in non-farm payroll employment and No. 40 in state gross domestic product.