ON-Lion Letter
As states face their toughest budgetary climates in a generation, the authors of an April report by the American Legislative Exchange Council (ALEC) in Washington, D.C., point out what states should do to alleviate the fiscal pain, and also what they should avoid.  The third edition of Rich States, Poor States:  ALEC-Laffer State Economic Competitiveness Index shows how many states responded to the economic crisis with higher taxes, new spending, and more debt.  Instead of continuing down this road to a financial meltdown, the authors outline the steps states can take to bring about economic recovery.

"Many state legislators across America are taking the wrong actions to improve their economies," according to Indiana State Sen. Jim Buck, chairman of ALEC's Tax and Fiscal Policy Task Force.  "As elected officials, we must be exceedingly vigilant to avoid tax increases, which would only prolong the current downturn for states."

Co-author and renowned economist Dr. Arthur B. Laffer summarized the report's findings by saying, "Tax and economic policies are essential to the competiveness of our states.  Most actions being taken in state capitals today -- and practically all actions from Washington, D.C., today -- are flat-out wrong."  Rich States, Poor States presents state economic-outlook rankings based on public policies that have a proven impact on growth, revealing which states have the best chance of experiencing economic recovery and which need to re-examine their policies before they can expect to see improvement.

Laffer and his co-authors, Stephen Moore, senior economics writer at The Wall Street Journal, and Jonathan Williams, director of ALEC's Tax and Fiscal Policy Task Force, analyzed how economic competitiveness drives income, population, and job growth in the states.  They found that states with a high and rising tax burden are more likely to drive away individuals and business, while those with lower and falling tax burdens are more likely to attract businesses and create jobs.

The top five states, according to the ALEC-Laffer Index, are Utah, Colorado, Arizona, South Dakota, and Florida.  The worst is New York, and the other in the bottom five are Vermont, New Jersey, Illinois, and California.

The Lynde and Harry Bradley Foundation in Milwaukee supports the work of ALEC's Tax and Fiscal Policy Task Force.
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