Iowa ‘competitiveness’ ranking unchanged

Iowa is ranked 25th in the nation in terms of economic competitiveness, unchanged from 2013 in a report that cites its high marginal corporate income tax rate, property tax burden and other negative factors.

Rich States, Poor States: The ALEC-Laffer State Economic Competitiveness Index for 2014 ranks the economic competitiveness of states using 15 equally weighted policy variables. Economist Arthur Laffer, Heritage Foundation Chief Economist Stephen Moore and Jonathan Williams, director of the American Legislative Exchange Council Center for State Fiscal Reform, authored the report.

Iowa is ranked 46th for its top marginal corporate income tax rate of 9.9 percent, 32nd for property tax burden of $35.15 per $1,000 of personal income, 26th for sales tax burden of $23.34 per $1,000 of personal income and 33rd for 564.8 public employees (full-time equivalent) per 10,000 of population.

Iowa ranked No. 1 as a right-to-work state and having the lowest state minimum wage of $7.25 per hour. It ranked 50th for having an estate tax.

In a conference call, Laffer and Moore said states that do not reduce the tax burden on businesses will continue to see out migration of jobs and residents. They cited New York (50th), Illinois (48th) and California (46th) as states that continue to lose businesses due to burdensome regulation and taxes.

While previous reports also have advocated reduction of progressive taxes to attract economic development, Peter Fisher, research director of the nonpartisan Iowa Policy Project in Iowa City, says they have the opposite effect.

'The policies they endorse actually forecast worse state outcomes for job creation and paychecks,” Fisher said. 'There is virtually no relationship between the ALEC ranking and state gross domestic product.

'Further examination of the predictive power of other key components of ALEC's rankings shows that none had a statistically significant effect on growth in state GDP, non-farm employment, or per capita income.”