In recent legislative sessions, Indiana has enacted substantial policy reforms that resulted in greater economic freedom and stronger economic growth. Economic growth has real implications for Hoosier families: jobs for those unemployed; promotions for those at work; survival for small businesses; and an encouraging atmosphere for entrepreneurs. A recent study by the American Legislative Exchange Council (ALEC) ranks Indiana as the third-most competitive state in the country in terms of economic policy, up from 14th last year and just 24th the year before.
The report, “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index,” is authored by Arthur Laffer, Stephen Moore and Jonathan Williams and looks at 15 equally weighted policy variables most highly correlated with economic growth. Categories such as taxes, labor policy, regulations and civil court systems are ranked among the states and compiled into an overall ranking of economic freedom that establishes which states are most competitive in terms of public policy.
The implications of sound public policy are significant. The correlation between ALEC’s “Rich States, Poor States” economic competitiveness index and state economic health demonstrates a strong and significant connection between market-based policy (i.e., economic freedom) and positive fiscal outcomes: economic growth, job growth, income growth and new Hoosier residents. The conclusion should be of little surprise: Reducing the burden of government regulations encourages an employer-friendly climate that returns more money to the pockets of taxpayers and employers. Such employer-friendly environments also attract potential new employers and citizens looking to escape bad policy environments in states such as Illinois, California and New York.
Indiana jumped from 24th to 14th and most recently to third by enacting common-sense policy reform that included reducing the corporate tax burden and personal property tax on small businesses. In addition to these critical reforms, Indiana policymakers reviewed and altered public policy to attract talented workers, entrepreneurs, employers and capital.