This article originally appeared on heartland.org.

Though conservative �??red�?� states have more competitive tax systems and regulatory systems, legislators in many liberal �??blue�?� states are beginning to respond with good reforms of their own, according to the latest release of the American Legislative Exchange Council�??s Rich States, Poor States report.

In all, 17 states enacted important tax reforms in 2013, making it �??a standout year for tax changes in the states,�?� according to the authors.

ALEC released the report�??s State Economic Competitiveness Index in April and in August followed with the release of three new chapters: one on important state policy developments that occurred during 2013 and the first half of 2014; the second on the migrations of people and their wealth into and out of states; and the third on the real-world effects of government policies including minimum wage laws, estate or �??death�?� taxes, and tax burdens.

Coming to Grips with Reality

�??There�??s been positive tax reform�?� in many states including North Carolina, Indiana and even Maryland, �??which has started to show a pulse after many years of bad economics,�?� said report co-author Jonathan Williams, director of ALEC�??s Center for State Fiscal Reform. His co-authors are economists Stephen Moore of the Heritage Foundation and Arthur Laffer of Laffer Associates, an economic research and consulting firm.

In a conference call, they noted Maryland legislators passed a bill to raise the estate tax exemption almost fivefold over the next five years. The larger the exemption, the less tax that must be paid. In Rhode Island, another sky-blue state, legislators okayed increases in the estate tax exemption and cut the corporate income tax rate, from 9 percent to 7 percent. New York, which ALEC ranks last in competitiveness, also saw its governor sign a bill to reduce the state�??s corporate tax rate.

�??Even in deep blue states, they�??re realizing these kinds of changes are necessary to stay afloat,�?� Williams said.

He said most states throughout the Midwest �??have been realizing the need to compete.�?� Among them: Kansas, Michigan, Missouri, and Wisconsin.

Even Illinois, which is dominated by Democrats and has one of the worst competitiveness rankings in the nation, saw legislators back away from calls to impose a tax surcharge on millionaires and go from a flat-rate income tax to a �??progressive�?� income tax with higher tax rates on higher incomes.

On balance, though, Illinois, Maryland, Minnesota, New York and certain other states appear to be �??trying to tax themselves into prosperity,�?� said Laffer, while other states have embraced more pro-growth policies.

These stark differences are giving the nation a chance to see the results over the long-term. He said he expects the pro-growth states will be the winners, as they have been in recent decades, as evidenced by big shifts of populations �?? and their wealth �?? out of states with high taxes and heavy regulations to states with lower taxes and lighter regulations.

Moore noted Illinois has been on a tax-hike binge, yet remains a fiscal disaster.

�??Illinois is a debacle, a total debacle,�?� he said. �??They still have huge deficits, huge unpaid bills, and they�??ve raised taxes more than any other state in recent years.�?�

Meanwhile, Illinois�??s neighbor to the north, Wisconsin, has enacted more than $1 billion of tax cuts since 2013 and is projecting budget surpluses.

Silver Linings, Black Marks

Moore and his co-authors are bipartisan in their praise and blame.

Moore noted Virginia, under a Republican governor, has fallen in the competitiveness rankings, the result of �??tax increases that were harmful�?� and �??wasted money on an absurd transportation policy�?� that legislators passed �??at the behest of the transportation and construction industries.

�??It was the worst of Republicanism.�?�

State Rep. Ken Wyler (R-NH), chairman of ALEC�??s Tax and Fiscal Policy Task Force, said he believes the report is useful �??because people can track changes that states are making�?� and the results they are getting.

�??My state of New Hampshire has stood still and we�??ve gotten worse in the rankings because other states are doing positive changes.�?�