by Brian Balfour
Senior Vice President of Research, John Locke Foundation
The American Legislative Exchange Council just released its 2022 “Rich States, Poor States” report.
In it, North Carolina ranks 2nd, behind only Utah, in “economic outlook.” The ranking “is a forward-looking forecast based on the state’s standing (equal-weighted average) in 15 important state policy variables.” Variables include tax rates, tax burdens, state debt, public employees per capita, and right-to-work status.
North Carolina’s ranking was bolstered by very strong ratings in the categories of corporate income tax rate, recently enacted tax changes, the lack of an inheritance tax, and right-to-work status.
North Carolina ranked a middling 26th in economic outlook back in 2011. But a decade of conservative tax reforms greatly brightened the state’s outlook. The state has ranked 7th or better every year beginning in 2014.
In the report’s “Economic Performance” category, North Carolina ranks a very solid 12th. This ranking is backward-looking and examines the states’ performance over the past decade in key indicators like GDP growth and net migration.
The 2022 edition is the 15th annual report, which concludes that:
“Generally speaking, states that spend less — especially on income transfer programs — and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.”