Hawaii Improves its Economic Competitiveness Ranking

New report ranks Hawaii 36th in economic outlook and 17th in economic performance

HONOLULU, Hawaii—April 15, 2014—Hawaii’s economic upswing has paid off in improved competitiveness and performance according to the annual Rich States, Poor States report from the American Legislative Exchange Council (ALEC). The state ranked 17th in economic performance and moved up four places to rank 36th in economic outlook.

The annual state-by-state competitiveness index, authored by economist Dr. Arthur B. Laffer, former Wall Street Journal senior economics writer Stephen Moore and Jonathan Williams of ALEC, is often used by policy makers and legislators as a guide to the best practices in encouraging economic growth. “Rich States, Poor Statesdemonstrates that pro-growth policies help state economies grow,” states Jonathan Williams, director of ALEC’s Center for State Fiscal Reform and co-author of the report. “Hawaii can compete nationally for jobs, investments, and growth by creating an environment where businesses and taxpayers can prosper.”

Highlights of Hawaii’s performance in the 2014 Rich States, Poor States report include:

  • Hawaii ranks 11th in State Gross Domestic Product (with a cumulative growth of 61.8% from 2002-2012)
  • Hawaii is 31st in Absolute Domestic Migration (the deficit of human capital increased in 2012, but is still down from 2007 – the worst year by far).
  • The state ranks 48th in Top Marginal Personal Income Tax Rate and 50th in Sales Tax Burden.
  • Hawaii ranks 1st in State Minimum Wage and 9th in both Property Tax Burden and Recently Legislated Tax Changes.

“There is a wealth of good news to be found in Hawaii’s improved ranking … along with a few cautions,” stated Dr. Keli’i Akina, President of the Grassroot Institute of Hawaii. “As the state’s economy has recovered, it is good to see these indicators reflected in our overall economic outlook. However, the State Legislature must be cautioned not to adopt policies that could derail such a promising beginning.”

Dr. Akina referred specifically to the state’s high competitiveness ranking for state minimum wage, a positive indicator that threatens to be reversed by the actions of the Legislature this session. “The Grassroot Institute has demonstrated that the proposed increase in the minimum wage will have a harmful effect on business in our state. This is further evidence that this ill-considered measure will also damage our economic competitiveness.”

“It is also worth noting that the single biggest obstacle to a booming economy in our state is the heavy tax burden–especially the General Excise Tax,” he continued. “Lowering taxes and reforming the GET is the best way to help Hawaii’s working families while improving our economic competitiveness. Best practices demonstrate that free market solutions that emphasize fiscal responsibility are the best path to prosperity. We have the road map. Now we just have to stay on course.”

To read or download the report in its entirety, go to http://www.alec.org/publications/rich-states-poor-states/.

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