Few surprises in new ALEC-Laffer report: Ky still not competitive

The new 2011 edition of the ALEC-Laffer State Economic Competitiveness Index is now out. But it contains no surprises for Kentuckians.

Both Kentucky’s economic outlook and performance rankings occupy the same spots from last year at No. 40 and No. 31 respectively. Neighboring Tennessee ranks below Kentucky on ten-year economic performance at No. 36, but much above Kentucky on economic outlook at No. 8.

Tennessee’s absence of a state earned income tax and its status as a right-to-work">right-to-work state has provided Tennessee with the eighth highest absolute domestic migration in the nation over the past ten years.

Kentucky’s dismal economic outlook is based on 15 equally-weighted factors including highest marginal personal and corporate income tax rate (8.2%), debt service as a share of tax revenue (11.8%), percent of workforce in public sector (5.6%), average workers’ compensation costs (2.29% of total payroll), the imposition of the inheritance tax and forced-union status.

The ALEC-Laffer economic outlook index makes clear where Kentucky needs to make serious changes to improve its long-term economic condition: the top marginal personal income tax rate is the tenth highest in the nation; the miscellaneous tax burden (excluding income, sales, and property taxes) is twelfth highest; the ratio of debt service to tax revenue is third highest; and the quality of Kentucky’s legal system (based on tort litigation treatment, judicial impartiality, etc) is the second worst in the nation.

Click here for the full report.

According to this report card, Kentucky has ample room for serious fiscal improvement.

By Phil Impellizzeri, Bluegrass Institute intern