2013 Economic Freedom of North America
Posted by robertmbeard 9 years, 11 months ago to Economics
The Fraser Institute is a free market think tank in Alberta, Canada. Here is their assessment of economic freedom in each US state and Canadian province...
(1) size of government
(2) takings and discriminatory taxation
(3) regulation
The 10 components of the 3 broad areas above are:
(1A) Government spending as % of GDP
(1B) Transfers and subsidies as % of GDP
(1C) Social security payments as % of GDP
(2A) Total tax revenue as % of GDP
(2B) Top marginal income tax rate and income threshold
(2C) Indirect tax revenue as % of GDP
(2D) Sales taxes as % of GDP
(3A) labor market freedom
(3B) credit market regulations
(3C) business regulations
While not included in the overall composite scores in the comparison summary, the study includes additional info in 3 more broad areas:
(4) legal system and property rights
(5) sound money (monetary policy and inflation)
(6) freedom to trade internationally
The study looks fairly comprehensive and well done... It is 92 pages long and provides tables of relative rankings for states/provinces for each of the economic freedom components above...
The study also breaks down the data between the all-government level and the sub-national level. At the sub-national level, the 10 best states/provinces for economic freedom were:
(1) Alberta, Canada
(2) South Dakota
(3) Tennessee
(4) Delaware
(5) Texas
(6) Virginia
(7) Louisiana
(8) North Dakota
(9) Georgia
(10) Nebraska
The 10 worst states/provinces identified were:
(51) California
(52) Maine
(53) Vermont
(54) Ontario, Canada
(55) New York
(56) New Brunswick, Canada
(57) Manitoba, Canada
(58) Prince Edward Island, Canada
(59) Nova Scotia, Canada
(60) Quebec, Canada
At the all-government level, the 10 Canadian provinces score better than shown above, primarily since Canada's federal taxes and government spending are not as bad as the US's federal taxes and spending...
"provinces" are NOT "States", the two are not equivalent and shouldn't be compared or intermixed as equals.
(1) all govt level (fed, state, local)
(2) sub-national level (state, local)
Illinois ranks 33rd at the sub-national level (31st among US states only) and ranks 14th at the all govt level (10th among US states only). Why is there a difference, you may ask?
The sub-national ranking (which I listed in the posts on this page) is a better state vs. state comparison. At the all govt level, certain inequities due to federal policies skew the rankings. For southern states, where federal transfer payments (welfare) take from some states and subsidize others, the component 1B score changes. This is where Illinois scores high (8.7) -- apparently the feds transfer less welfare to Illinois than to southern states... Component 2D (sales taxes) is also high for Illinois (8.2).
Since composite scores at the all-govt level are closer together for US states, it only takes 1 or 2 scores above to skew Illinois to a more favorable score. However, for better state vs. state comparisons, the sub-national score eliminates any federal skewing, and it shows Illinois ranking poorly, as I would expect...
Florida scores 39th at the all-govt level (33rd among US states) and scores 23rd at the sub-national level (22nd among US states). Sub-national govt spending (1A) and indirect tax revenues (2C) are very poor scores (both 4.9) and largely due to PRSF activity. At the all-govt level, Florida scores poorly on Social Security spending (1C) with a score of 3.8, and on Indirect Tax revenues (2C) with a score of 3.6. On the positive side, Florida scores 10.0 for top marginal state income tax rate (no income tax) at the sub-national level...