Where does Ala. rank in the rich-state, poor-state rankings? Maybe higher than you'd think

BIRMINGHAM, Ala. — The latest edition of a yearly study by the American Legislative Exchange Council (ALEC) identifies the public policies that have lead states to economic prosperity, and which states are poised to move on up the list of the most prosperous states.

The study was written by economist Dr. Arthur Laffer, Stephen Moore, chief economist at the Heritage Foundation, and Jonathan Williams, Director of the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council.

“Throughout the country, states are looking for ways to energize their economies and become more competitive,” the study says. “Each state confronts this task with a set of policy decisions unique to their own situation, but not all state policies lead to economic prosperity.”

“Generally speaking,” the study continues, “states that spend less—especially on income transfer programs, and states that tax less—particularly on productive activities such as working or investing—experience higher growth rates than states that tax and spend more.”

Alabamians who are used to looking toward the bottom of most rankings will be pleasantly surprised to see how well the state did on the study’s list.

Alabama came in at #29 on the Economic Performance ranking, but an encouraging #19 in the 2015 Economic Outlook measure, up one spot from the 2014 version of the study.

The study measures tax burdens, state GDP, net migration (how many people moved into or left the state), and employment, among other measures to determine the rankings.

So, what are the measures that have helped Alabama move up the ranking? The Yellowhammer State’s status as a right-to-work state, low property taxes, relatively low marginal income tax rate, and lack of an inheritance tax all put Alabama higher on the list.

The state’s high sales taxes, high number of public employees, and a survey of the state’s legal system were all marks against Alabama receiving a higher Economic Outlook ranking.

The states with the highest economic outlooks, according to the study, are all low tax, right-to-work states. Unsurprisingly, the reverse is also true. The lowest ranking states in the report are states like New York (#50), whose high taxes and unfavorable business environment have sent employers—and their employees—running in recent years.

The study points out that 1.5 million people left New York between 2003 and 2013, and California (#44) lost 1.2 million. Meanwhile Texas (#1) gained 1.2 million residents, Florida (#15) gained nearly a million, and Arizona (#5) welcomed over half a million new people to their state.

So, how can Alabama continue to improve the upward mobility of its economy and move even further up the list according to the study? An overhaul of the state’s infamous tort system, decreasing the number of Alabamians employed by the government, and lowering the sales tax.

A good way to stall growth? Raising taxes.