Trump Tax Reform Is Already Fueling State Growth

Trump Tax Reform Is Already Fueling State Growth
The tax reform law that past last December by President Trump is already fueling state governments across America.

A new report released Tuesday by the American Legislative Exchange Council (ALEC) found that closed loopholes and deductions at the federal level are resulting in increased revenue at the state level, which when invested properly could provide for greater economic dividends down the line.

The report, titled Rich States, Poor States, is published annually and examines the latest developments in state economic growth, outlook, and competitiveness utilizing 15 equally weighted policy variables. The report found that states with lower tax burdens, decreased pension liabilities, and limited regulatory structures rank highest in economic outlook.

Utah, for the 11th year in a row, grabbed the top spot in the report's rankings. The state's stranglehold on first place was solidified by its decision this legislative session to cut state income taxes. The decision came after estimates conducted by the Office of the Legislative Fiscal Analyst, the nonpartisan budget information arm of the state legislature, found that Utah would see its revenues grow anywhere between $30-$80 million annually upon conforming to the new federal tax law.

Jonathan Williams, vice president of the ALEC Center for State Fiscal Reform who helped craft the report, said that increasing state revenues are an overlooked and unexpected consequence of the new tax law.

"The untold story of federal tax reform is its impact at the state level, where the vast majority of states are now enjoying unexpected revenue gains," Williams said. "This trend is empowering additional pro-growth tax reform efforts that will provide an added level of benefits for hardworking taxpayers."

Idaho Is The Big Winner
While Utah's place at the top was secure and rested on decades of strong fiscal leadership by the state's elected officials, Idaho was the report's clear success story. The state's catapult to the number two spot (it was 10th last year) was fueled by the decision to pass along tax reform savings directly to taxpayers.

When the Idaho State Tax Commission estimated that conforming to the new federal tax law would result in an additional $97.4 million for state coffers, lawmakers reciprocated by passing the largest tax cuts in state history. The cuts, championed by Gov. C.L. "Butch" Otter (R.), slashed the state's income and corporate tax rates and created a new child tax credit to help working families.

Otter told the Washington Free Beacon that he welcomed the report's release and that it stood as a testament to the hard work Idaho has undertaken in creating an economic environment where individuals and businesses can prosper.

"This report provides welcome recognition of the work that Idaho has done to make our state as competitive as possible in the attraction and retention of businesses, investment, and the people who appreciate keeping more of their hard-earned dollars," Otter said.

Georgia Jumps to 11th

Georgia, which ranked number 17 on ALEC's ranking last year, jumped to 11th place.

Arthur Laffer, who served as a key economic adviser to President Ronald Reagan and helped author the report, said he was encouraged by the decision of states to cut taxes and believes more will follow suit.

"I’m optimistic that we may see 25 to 30 states cut taxes thanks to the federal tax overhaul,"

The states that ranked at the bottom of the list tended to be heavily industrialized with higher tax burdens, like New York, Illinois, and California.

Related Story: Democrats 2018 Election Message “Raise Taxes”

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