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October 10 2018

Report: Low Tax States The Most Solvent in U.S.

by Charlotte Hays

The Mercatus Center at George Mason has for the fifth time ranked states according to their fiscal condition. The rankings give a clear sign as to which political party's policies are more conducive to financial health.

Mercatus is a free-market organization, but Investor's Business Daily notes that they can't be accused of fudging on the figures because they relied on official financial reports from the states.

According to IBD, the rankings took into consideration the state's "cash solvency, budget solvency, the ability to meet long-term spending commitments, state spending and taxes as a share of personal income, and unfunded pension liabilities and debt."

And the envelope please . . .

For 2016, the give most fiscally sound states were Nebraska, South Dakota, Tennessee, Florida and Oklahoma.

The least financially sound from the same year, starting with the worst, are Illinois, Connecticut, New Jersey, Massachusetts and Kentucky.

What do you notice right away?

Of the 10 states that show up most frequently at the bottom of the list since 2006, nine are solid blue states. Of the 10 states with consistently the best record, all but one are solidly red states.

That isn't all:

There's another commonality between the best-run and worst-run states. Taxes.

As it turns out, states in the worst fiscal shape also tend to impose the highest tax rates in the nation. In fact, six of the 10 states that consistently show up as the least fiscally solvent rank in the Top 10 for highest taxes as a share of income, according to the Tax Foundation.

Of the 10 most fiscally sound states, all but one impose below-average tax burdens on their residents.

So, if it's not tax revenues, what makes a state fiscally sound or not? What the Mercatus data show is that it's the result of years of overspending and overpromising, mostly to unionized government workers by pliant Democratic leaders.

IBD sums up:

The best-run states show greater respect for taxpayers than the worst-run states.

The left constantly argues that its programs show more caring for people.

But that is only true if living in a state that is collapsing because it can't meet its financial obligations is beneficial to citizens.



Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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