August, 2016, By The Numbers: Low Taxes Mean More Fiscally Sound States, Better Economic Conditions, and More Individual Freedom

Back in July, 2016, we ran two consecutive posts that proved by the numbers that if you live in a state with low taxes, not only do you have more individual freedom, liberty, and rights, but the fiscal condition of your state’s financial picture is much more solvent and viable. One would think that a state that collects more taxes for the state government functions that they would not be in dire economic straits. But the reality of the numbers proved just the opposite: the more that a state government’s politicians tax its citizens the more likely they are to over spend and put their state government into financial stress. Those posts are listed below:

July, 2016, Part 1 and Part 2, By The Numbers: Low Taxes Mean More Fiscally Sound States and More Individual Freedom:
http://loathemygovernment.blogspot.com/2016/07/july-2016-part-1-by-numbers-low-taxes.html

http://loathemygovernment.blogspot.com/2016/07/july-2016-part-2-by-numbers-less-taxes.html

We will continue this analysis today with another set of data to see if we can again prove, with real world data, that low taxes results in better lives, more freedom, and more economic growth.

Let’ start with a recent analysis from the Cato Institute and their latest analysis of how freedom varies across every state in the union. Cato looked at and analyzed dozens and dozens of factors including taxation, regulations, crime rates, and many, many other state level factors to determine a rank ordering of states from most free to least free. Based on their in-depth analysis they found that the citizens living in the following ten states had the most individual freedom:

1 - New Hampshire
2 - Alaska
3 - Oklahoma
4 - Indiana
5 - South Dakota
6 - Tennessee
7 - Idaho
8 - Florida 
9 - Iowa
10 - Arizona

The states with the least amount of freedom for its citizens turned out to be:

41 - Kentucky
42 - Maine
43 - Rhode Island
44 - Illinois
45 - Connecticut
46 - Maryland
47 - New Jersey
48 - Hawaii
49 - California
50 - New York

We will use these ranking orderings of ten most free and ten least free states for the basis of our analysis.

1) Let’s start with data from the Wallet Hub website. This website analyzes the tax burden by state and rank orders the results by least taxed states to most taxed states. If we take the Wallet Hub tax rankings of the most free states above we get an average rank of 13.2. 

If we take the Wallet Hub tax rankings of the least free states above we get an average rank of 42.5. Thus, very clearly we see that the most free states strongly correlate with low taxes by a factor of three to one if we look at average rankings vs. the least free states that have much higher taxes.

2) Let’s move to the fiscal condition of health and condition of each state government. The Mercatus Center at George Mason University does a regular study that analyzes the fiscal condition of every state government and then rank orders its findings from states in the best fiscal condition to states in the worst fiscal condition.

If we take the Mercatus rankings of the fiscal condition of the most free states above we get an average rank of 13.4. If we take the Mercatus rankings of the fiscal condition of the least free states above we get an average rank of 44.3. Thus, very clearly we see that the most free states correlate with those states having state government that are in the best fiscal condition and the least free states tend tobe in the worst fiscal condition.

3) Let’s move to Bureau of Labor Statistics (BLS) results that estimate the unemployment rate on a state by state basis. If we take the BLS rankings of the unemployment rate of the most free states above we get an average rank of 20.9. If we take the BLS rankings of the unemployment rate of the least free states above we get an average rank of 28.2. 

Thus, very clearly we see that the most free states correlate with those states having the lowest unemployment rates and the least free states correlate with those states that have the higher unemployment rates.

4) Let’s move to the economic growth rates at the state level as analyzed by the Business Insider website. The Business Insider does a regular study that analyzes the annual economic growth of every state and then rank orderings its findings from states with the highest economic growth rates to states with the worst economic growth rates.

If we take the 2015 Business Insider rankings of state level economic growth of the most free states above we get an average rank of 24.0. If we take the Business Insider rankings of the state level economic growth of the least free states above we get an average rank of 30.4. Thus, very clearly we see that the most free states correlate with those states having the higher economic growth rates and the least free states correlate with those states having lower economic growth.

We also looked at longer economic growth rates vs. just the 2015 growth rates that the Business Insider website came up with. The results were essentially the same if we look at the state level economic growth over several years leading up to 2015 where the most free states above had an average economic growth rank of 23.7 while the least free states above had an average economic growth rank of 36.1, the same conclusion that we came to with the Business Insider data: the freer the state the higher the economic growth and the less free the state the lower the economic growth on average.

5) Finally, let’s move to the best places to retire. To be honest, I cannot find the source I used for the best places to retire in rank order by state but let’s go with it anyway! It was a valid site and when I find the source I will put it in here.

If we take the rank ordering of the best to worst retirement states of the most free states above we get an average rank of 21.2. If we take the rank ordering of the best to worst retirement states of the least free states above we get an average rank of 35.6. Thus, very clearly we see that the most free states correlate with those states that are the best options for retirement while the least free states correlate with those states that are the worst options for retirement.

In conclusion, on average states with the most freedom also correlate with the best states to retire to, they are the best states for economic growth and opportunity, they have the lower unemployment rates, they have lower tax rates, and they have state governments that are in the best fiscal condition. On average, states with the least freedom also are the worst states to retire to, they are the worst states for economic growth and opportunity, they have higher unemployment rates, they have higher tax rates, and they have state governments that are in the worst fiscal condition.

Now, strong correlations are not necessarily strong causations. For example, just because a state has a high freedom rating does not necessarily mean that higher freedom causes lower unemployment rates. However, given the overwhelmingly strong correlation between freedom and low government interference in citizens lives, I would much rather live in a state like Florida which has an average rank of 16.1 across the six factors we reviewed above vs. a state like New Jersey which has an average rank of 40.1. That strong of a correlation is mighty powerful from a causation perspective.

When will the American political class figure this out: lower taxes, more freedom likely gives us higher economic growth, lower unemployment, a more fiscally sound government, and generally better lives. The numbers do not lie.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w