And the Winner is—Not Hawaii

by Kelii Akina, President, Grassroot Institute, April 28, 2017

The most recent version of Rich States, Poor States has been released, and once again, Hawaii ends up on the wrong end of that title.

The annual ALEC-Laffer State Economic Competitiveness Index measures economic growth and ranks the economic outlook of all 50 states based on based on 15 different policy variables, from tax rates to labor and regulation.

As a general rule, states that spend less and tax less (especially productive activities like investment and work) will rank higher in economic outlook.

In 2017, Hawaii slid even further toward the bottom, coming in at 43 overall.

Though the state reached a personal best of 36 overall in 2014, Hawaii has been regressing ever since. This year's ranking is one lower than last year and the worst since 2012.

Unsurprisingly, our tax and labor policies were the biggest drag on the ranking. Hawaii's Sales Tax burden ranked worst in the country, accounting for $47.43 per $1,000 of personal income. The top marginal personal income tax rate ranked 42, and while the property tax ranking remains good (10th overall), the remaining tax burden was a dismal 46, accounting for $27.99 per $1,000 of personal income.

Of course, we don't have to continue the downward trajectory of the last several years. When ALEC released Rich States, Poor States, the report was accompanied by quote after quote from politicians across the country. All of them testified to the fact that they depend on the guidance of surveys like this to formulate policies that will make their state more competitive.

Unfortunately, our policymakers seem slow to catch on. This year's legislative session featured a proposal to increase the minimum wage by more than a third (we're ranked 38 as it is). Not to mention numerous tax increases ... including one that would put a property tax directly in the Constitution.

There is no mystery about what we have to do to increase our state's economic competitiveness. The first step is to stop the downward trend by putting an end to tax-and-spend governance. After righting the ship, we can cut taxes and encourage growth by reducing red tape and creating a business-friendly environment.

All around the country, states are using this report as a guide for how to move from a "poor state" to a "rich" one. Hawaii can make that change as well, if only we have the fortitude to enact the right policies.

E hana kakou (Let's work together!),

Keli'i Akina, Ph.D.

President/CEO 

Related: Rich States-Poor States: Hawaii Ranks 43rd