On April 21st, the American Legislative Exchange Council (ALEC) released the 16th annual edition of “Rich States, Poor States”, which ranks states according to the best economic outlook using criteria such as State Gross Domestic Product, Absolute Domestic Migration and Non-Farm Payroll Employment. For the 16th year in a row, Utah was ranked #1.

This is an amazing accomplishment. Maintaining a #1 ranking like this for so long does not happen by accident. It is the result of decades of effort by Utah’s elected officials. Cultivating a business friendly environment and a low tax burden is a difficult lift against the countless voices that hammer away at the Legislature in an attempt to ramp up government spending and move the needle in the other direction. The resulting job growth that comes from maintaining that business friendly environment, along with our flat income tax rate, gold-standard property tax laws, are what has driven Utah’s #1 ranking for 16 years running.

While Utah continues to move in the right direction, for example, by lowering the state income tax rate to 4.65% and providing additional tax relief in other areas, other states at the bottom of the same ALEC ranking are doubling down on even higher taxes and anti-business, anti-job growth policies that will continue to drive individuals and businesses, along with their tax base, to other pro-growth states like Utah, Arizona, Idaho and North Carolina.

However, Utah has a unique problem. Several states are nipping at Utah’s heels and will likely overtake the #1 spot soon. 

Arizona has vaulted from #12 just a few years ago to #3 currently. They recently cut their state income tax rate all the way to a flat 2.5%  (a cut 10 times the size of Utah’s cut) and eliminated their statewide property tax levy. Arizona is putting on a clinic on how to govern correctly. 

North Carolina has also moved from #26 just four years ago to now holding the #2 spot right behind Utah. Over the last decade their Legislature has ratcheted down their individual income tax rate from above 7% to a level below 4% in the near future. Their corporate income tax rate is now at 2.5% and going to 0% by the end of the decade. Companies have taken note and the job growth momentum in North Carolina is starting to accelerate as a result.

Although Utah enjoyed the #1 spot again this year – this trend is likely over unless elected officials move boldly in short order.