California Ranks Second Worst in U.S. on Economic Freedom Index: News Releases: The Independent Institute

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News Release
December 14, 2017

California Ranks Second Worst in U.S. on Economic Freedom Index
High Taxes, Overregulation Causing Exodus of Workers and Employers to Other States

OAKLAND—As Congress considers overhauling the U.S. tax code in the hope of easing the financial burden on households and making the nation more competitive globally, California’s policymakers have enacted policies more harmful to economic freedom and opportunity than those of almost any other state, according to the 2017 Economic Freedom of North America report, released today by the Independent Institute in conjunction with Canada’s Fraser Institute.

Not only does California rank 49th out of all 50 U.S. states, but its burdensome combination of high taxes and regulatory overreach is so toxic for economic opportunity that it is causing a major out-migration of both workers and enterprises to other states.

“California’s lack of economic freedom helped motivate more than 10,000 businesses to leave the Golden State, reduce operations, or expand elsewhere during the past seven years,” said Dr. Lawrence J. McQuillan, Senior Fellow and Director of the Independent Institute’s Center on Entrepreneurial Innovation. Census data show that 3.5 million people left California for greener pastures from 2010 to 2015.

While California ranks second worst in economic freedom (only New York was lower), New Hampshire ranked highest for the third year in a row, scoring 8.3 out of 10 in measures of government spending, taxation, and labor market restrictions based on 2015 data, the most recent year available. Rounding out the top five freest states are Florida and Texas (tied for 2nd), South Dakota (4th), and Tennessee (5th).

“The freest economies operate with comparatively less government interference, relying more on personal choice and markets to decide what’s produced, how it’s produced, and how much is produced,” said Fred McMahon, who co-authored the report with economists Dean Stansel of Southern Methodist University and José Torra of the Mexico City–based Caminos de la Liberta.

“The 2017 report shows the public, news media, and policymakers in Sacramento what changes need to be made to make California competitive in the future,” said David J. Theroux, Founder and President of Independent.

The Independent Institute is a non-profit, research and educational organization that promotes the power of independent thinking to boldly advance peaceful, prosperous, and free societies grounded in a commitment to human worth and dignity. For media inquiries, contact Communications Manager Rob Ade: [email protected]; (510) 632-1366, ext. 114.

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