“Rich States, Poor States” Ranks Vermont 49th

April 30, 2019

by Rob Roper

The American Legislative Exchange Council just published its annual analysis of states’ economic outlooks, Rich States, Poor States, and, overall, they peg Vermont as 49th, or next to worst. Thank goodness for New York! But this is no surprise since Vermont has ranked 49th overall every year since 2011 except 2013 when we were dead last.

The ranking takes into account fifteen subcategories, including top marginal income tax (43), top corporate income tax (39), income tax progressivity (49), property tax burden (49), sales tax burden (7), remaining tax burden (47), estate/inheritance tax (50), recently levied tax changes (32), debt service as share of revenue (3), per capita public employees (47), judiciary (2), minimum wage (46), workers’ compensation costs (37), right to work (50), and number of tax expenditure limits (34).

This is certainly not where we want to be, but I do wonder if there isn’t some anti-Vermont bias baked into these rankings based on the backward looking analysis of economic performance over the preceding year. This calculation takes into account actual state GDP growth, absolute domestic migration, and non-farm payroll employment, and here Vermont came in 38th. So, we were projected to be 49th in 2017, but we outperformed expectations and ended up 38th. Still not good, but certainly not tail end Charlie. This is a pretty consistent phenomenon in “Rich States” where Vermont is concerned.

As for others, on the opposite page from Vermont, Virginia was projected to perform 11th in 2017, but actually came in 23rd according to the formula – from an expected honorable mention to meh. Montana was projected to be 39th but wound up in the top ten at number 9, and Indiana, projected to be number 2 came in 30th. The state that actually performed the worst in 2017 was Connecticut (not a shocker), and the state that performed the best was Texas (also not a shocker). But these states were projected to perform 40th and 14th respectively.

These numbers come from the same organization, so you can’t really say one set is wrong and one set is right. In fact, bot sets are “right” in that they are based on actual, verifiable statistics that are useful to look at. But if you’re looking for a betting guide to future performance, you’re probably better off using your own judgement.

Rob Roper is president of the Ethan Allen Institute

{ 1 comment… read it below or add one }

Stephen Brent Hutchins April 30, 2019 at 10:08 pm

With a small population the tax burden will be greater. The only solution seems to be frugality and deep cuts in the budget. Not much chance of that especially since we are on the hook for overly generous pensions.

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