Low taxes and business friendly environment lead to greater growth in jobs

Edward Lazeer:
A number of current and former governors will be running for president in 2016, and each will tout his state’s accomplishments and claim credit for the positives, deserved or not. Politics aside, cross-state comparisons provide a real-world experiment that helps show which economic policies work and which don’t.

Employment, state GDP, labor-law and tax data from 2000 to the present yield two strong lessons. First, a business-friendly climate—market-oriented labor policies and lower taxes—is effective in raising the growth in a state’s gross domestic product and employment. Second, states that suffered the worst employment shocks in the 2007-09 recession had the most rapid postrecession employment growth. This suggests that the weak national recovery cannot be explained by the depth of the recession.

There are a number of ways to categorize a state’s business climate. I focused on labor policies and average tax rates. On average, I found that employment growth is twice as high in states that have a right-to-work law and minimum wages that are below average across states, and the difference is “statistically significant”—meaning that it is unlikely to have occurred by chance. GDP grows about 11/2 times faster over this period in those states.
...
Blue State policies of pushing up unfunded mandates like raising the minimum wage are shown to be counter productive in job creation.  The high tax states are also suffering from business and personal moves to more tax friendly states.
A CNBC analysis of tax data and figures provided by two major national moving companies shows that states with the highest per-capita taxes, for the most part, are also seeing the biggest net migration out of those states.
Connecticut  is a prime example of a state losing population because of its confiscatory cat policy.  Massachusetts, New York and New Jersey suffer the same out migration.  California is also losing its middle class increasing its income inequality problem.

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