State Spending to Blame for Low Economic Opportunity

Member Group : Commonwealth Foundation

New Report Shows Need for Government Spending Restraint

December 13, 2016, HARRISBURG, Pa.—When it comes to controlling spending, Pennsylvania ranks a disappointing 30th among states, according to the Economic Freedom of North America 2016 report, released today by the Fraser Institute.

The report evaluates states in three areas: government spending, taxes, and labor market freedom. While earning an overall rank of 18, the commonwealth scored poorly in its commitment to fiscal responsibility.

"You cannot ignore the link between high government spending and low economic freedom," commented Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation. "Hardworking Pennsylvanians are being asked to pay more and more to fund Harrisburg’s spending, leaving them less to save, invest, or spend in the local economy."

The report ranked Pennsylvania an abysmal 37th in income and payroll tax revenue as a percent of personal income.

"Big-government policies that tout revenue increases as the catchall solution don’t work," Stelle continued. "From 1970-2014, these policies led to Pennsylvania ranking 49th in job growth, 45th in personal income growth, and 48th in population growth. It’s no wonder people are voting with their feet and leaving Pennsylvania for states with greater economic freedom."

In 2015, Pennsylvania lost one person to another state every 12.5 minutes in net migration. Two of the most popular destinations for Pennsylvanians are Florida and Texas, the 2nd and 3rd freest states. These states have seen their populations grow 2.5 times faster than California and New York—the least free states in the country.

Beyond a population influx, the most-free states enjoyed an average per capita income 4.7 percent above the national average compared to roughly 3.3 percent below the national average in the least-free states, according to the report.

"This year, Gov. Wolf and lawmakers increased state spending by $1.5 billion, requiring targeted tax hikes that have already put dozens of small business owners out of business," continued Stelle. "This report emphasizes a lesson Pennsylvania desperately needs to learn: Unrestrained government spending doesn’t create economic growth—it kills it. But responsible spending growth will allow lawmakers to ease the tax burden for everyone. That’s how you create an environment of opportunity and economic growth for all Pennsylvanians."

Elizabeth Stelle and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at [email protected] or 862-703-6670 to schedule an interview.

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