Best Run States Are Low-Tax, Worst Are High-Tax

Each year the Mercatus Center at George Mason University ranks all 50 states based on their overall financial condition and ability to meet their obligations. The report is entitled “Ranking the States by Fiscal Condition” and the latest report was released on Tuesday of this week.

To compile the rankings, the Mercatus Center dissects each state’s audited Comprehensive Annual Financial Report (CAFR), which reveals the states’ financial health based on short and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits among others.

The most interesting thing about these rankings is that the most fiscally sound states in the nation are all low-tax, GOP strongholds, while the 10 least-solvent states are almost all high-tax and heavily Democratic. This year, Florida ranked #1 and New Jersey ranked last at #50.

In the chart below, Red states voted Republican in the last three presidential elections and/or have GOP control of the state government. Blue states voted Democratic in the last three presidential elections and/or have Democratic control of the state government.

Pennsylvania, normally a blue state, is colored “Purple” because it voted for Donald Trump last November and now has Republican control of the state government. * Montana, Louisiana and West Virginia all have Democratic governors.

As you can see, the results of the latest Mercatus Center rankings are stark. All of the Top 10 Best Run States have lower taxes and are dominated by Republicans. Almost all of the Bottom 10 Worst Run States have higher taxes and lean Democratic.

Let that sink in. This is a powerful message for conservatives! For liberals, it should be alarming.

Here are a few other interesting findings from this year’s Mercatus Center state rankings. Florida moved from sixth place last year to first. Alaska dropped from first place last year to 17th this year. Idaho moved into the Top 10 in this year’s report.

Near the bottom of the heap, Louisiana and West Virginia both dropped down in the 10-worst list, while Hawaii (not shown) greatly improved, going from 45th place last year to 27th this year. Connecticut, Maine and New York also climbed out of the bottom 10 list. But New Jersey fell to dead last from last year’s 48th place.

Here are a few more interesting points from the report:

  • Of the 25 most-solvent states, all but four are solidly Republican. Of the bottom 25 states, all but five are solidly Democratic.

  • Of the 15 least-solvent states, 10 are among the 15 states across America with the highest tax burdens.

  • Only one of the worst performing states Louisiana has a tax burden that is below 8% of income.

  • Finally, not one of the best performing states has a state tax burden above 9.6%.

The bottom line: Numerous states across the US are facing serious budget shortfalls and insolvency issues. Unlike the federal government, most states cannot borrow money to fund their budget deficits.

As a result, several states (including even some Republican states) have decided to raise taxes this year to cover budget shortfalls.

Yet the latest study from the Mercatus Center strongly suggests that the states which raise taxes may find themselves in even worse financial shape over the long-run.

Of the nine states that raised taxes this year, four of them are ranked in the bottom 10 – none are in the Top 10. That speaks volumes!

The message couldn’t be clearer! Yet I don’t think the liberals are listening. What else is new?

Editor’s Note: As a reminder, and as always, I really appreciate your comments and suggestions. If you have thoughts about any of my topics, let me know. If you have something you’d like me to address, let me know that, too. I may or may not write about it, but I am always interested to know what you find interesting. Don’t be shy.

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