Idaho has the fifth-best outlook for economic growth in the country, according to an annual study that credits governments that spend and tax less.

Idaho moved up two spots in this year’s “Rich States, Poor States” report from the American Legislative Exchange Council (ALEC), an association of state legislators that advocates for limited government. The lead author of the yearly report is economist Arthur Laffer, who worked for the Reagan administration and for Congress.

“State policies matter in terms of which states prosper and which states fall behind in the race for jobs and economic growth,” Laffer and his co-authors wrote. “The policy blunders that hurt growth prospects the most are high income tax rates, forced union work rules, heavy regulation, an excessive state workforce, unfunded public pensions and health plans, poorly performing schools, and a litigation
system that invites expensive and frivolous lawsuits.”

The study also contends that Idaho’s increasing population, as reflected in census data from last year, suggests that people are voting with their feet and relocating to states with a brighter outlook.

While Idaho’s outlook is near the top, its performance the past decade ranks 17th, according to the study. Neighboring Utah has the top outlook for the third straight year, and Wyoming also is ahead of Idaho. In the study’s rankings, Idaho scored well by not having a high minimum wage or much state debt. However, Idaho was below the national average for its income tax rates on individuals and businesses.

The “Rich States, Poor States” study includes a forward from Kansas GOP Gov. Sam Brownback, whose state ranked 27th. “Money is spent more efficiently by the private sector than by governments, so it is reasonable to expect that states with lower overall taxes have better economic environments than states with high taxes and more government spending,” Brownback said.

Read the full “Rich States, Poor States” study at ALEC’s website.

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