North Carolina was seventh-best among states for its economic outlook, says the 2018 edition of the American Legislative Exchange Council’s Rich States, Poor States.

ALEC, a nonpartisan membership organization of state legislators, has ranked states on economic outlook and performance for 11 years. Due to what ALEC calls a record of substantive pro-growth tax cuts, North Carolina made the top 10 list — along with Utah, Idaho, and Indiana. New York, Vermont, Illinois, and California landed at the bottom.

North Carolina didn’t reach the top 10 for economic performance, but it was close at 11th. The economic performance index looks at a state’s ranking in state gross domestic product, absolute domestic migration, and nonfarm payroll employment. While the economic performance index looks to the past, the economic outlook index looks to the potential impact of tax rates, regulatory burden, and labor policies.

“The shakeup in rankings is exciting and a testament to how states are always competing to offer the most pro-growth tax climate,” Rep. Jason Saine, R-Lincoln, and the national chair of ALEC, said in a press release. “When states compete on the merits of good public policy, ultimately the taxpayer ends up being the real winner.”

North Carolina earned its lowest score — 26th — on economic outlook in 2011, and its highest score in 2016 — second. The Tar Heel State fell from third in 2017 to seventh in 2018, as other states made more substantive reforms this year.

Legislators passed tax cuts in the state budget bill (Senate Bill 257), but the cuts won’t fully go into effect until 2019. These cuts include reducing the corporate income tax from 3 percent to 2.5 percent and lowering the individual income tax rate from nearly 5.5 percent to 5.25 percent. The bill also removed the mill machinery tax and reduced the franchise tax on small businesses.

Other variables contributing to the state’s economic outlook ranking include its status as a right-to-work state and it having no inheritance or estate tax.

“We are proud of what we have done in North Carolina and strive to stay competitive for both businesses and hard-working taxpayers,” Saine said.

