Texas ranks high on the annual list once again, while the usual stragglers continue their stranglehold on the bottom of the list — and on their taxpayers.
TEXAS, USA — Texas is renowned for its exceptional economic freedom. The Lone Star State actively nourishes a booming business climate with a light regulatory touch and a low living cost for its residents. This time, Florida narrowly won the top spot in the rankings, with some other states ranking higher than Texas.
In its 18th annual report, Fraser Institute notes that the Sunshine State was the most supportive of economic freedom in 2020, the latest year for which detailed data is available. The Economic Freedom of North America 2022 measures government spending, taxes, and regulatory environment using peer-reviewed research and modeling various indices to create a final ranking of “states were supportive of economic freedom, the ability of individuals to act in the economic sphere free of undue restrictions,” according to the Canadian think-tank.
Here is where each state ranks:
Economic Freedom Index (top 10)
To view the entire list, visit the Dallas Business Journal here .
In short, states rank higher when they have fewer regulations. The latest report shows that many top states share a common trait: they don’t have an income tax. However, it’s important to mention that some states without an income tax, such as Alaska, Nevada, Washington, and Wyoming, did not perform well in the analysis.
Some familiar states are atop the list, with New Hampshire, South Dakota, Tennessee and Texas rounding out the top five after Florida. But the difference between the top five states is slim in the final index scores. The same cannot be said for the states that didn’t fare as well, with the usual suspects maintaining their stranglehold on the bottom of the list — and on their taxpayers.
Once again, New York maintains its status as the state with the lowest level of economic freedom. While California put up a valiant struggle to finish last, its tax-and-spend game was no match for New York. The Empire State boasts a 10.9% top individual income tax rate, a 7.25% top corporate income tax rate, a 4% sales tax, and a 1.4% property tax, in addition to various local taxes, sin taxes, and a 48 cents per gallon tax on gas. These factors add up to a hefty 14.1% state and local tax burden.
With its diverse economy, Texas is home to industries such as oil and gas, tech and life sciences, agriculture, manufacturing and financial services. The state is firmly dedicated to fostering free-market approaches and easing regulatory impediments that could otherwise hamper enterprise and growth.
The study debuted in 1981, ranking Texas first in the initial report. Click here to learn more about Fraser Institute’s methodology.
On June 7, Gov. Greg Abbott signed new school property tax-based corporate incentives for Texas into law. It was the final step of a long journey that many economic development leaders in the state had pushed for since the last major tax incentives program, known as Chapter 313, ended in 2022. Abbott said he signed the Texas Jobs, Energy, Technology and Innovation Act, also called House Bill 5, “to help keep Texas the premier business destination in America.”
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