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Michigan advances to 17th on economic outlook index

The latest update of the American Legislative Exchange Council’s widely cited index of state competitiveness released at 2 p.m. today, the “Rich States, Poor States” report, shows that Michigan rose from 25th to 17th place in the report’s forward-looking “economic outlook” index. As recently as 2009 Michigan was in 34th place. This year, Utah tops the charts, and (not surprisingly) New York comes in dead last.

The new rankings appear in the 5th edition of the American Legislative Exchange Council’s “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.” ALEC is a Washington-based organization for state legislators, the center-right counterpart of the center-left National Conference of State Legislators.

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The index measures public policies in all 50 states and ranks them in two ways: economic performance and economic outlook. In other words, where a state has been, and where it may be going.

In the backward-looking “where we’ve been” measure, not surprisingly Michigan ranked 50th based on changes in per-capita income, domestic migration, and employment levels for the past 10 years.

The forward-looking “where we’re going” outlook examines 15 variables including tax burdens, debt levels, level of government employment, right-to-work status and mandated minimum wage levels. Michigan’s 17th place ranking returns the state to the position it occupied in 2007, before the Great Recession (and the not-so-great personal income and business tax hikes championed that year by then-Gov. Jennifer Granholm).

The report specifically cites the replacement of the  Michigan Business Tax in favor of a lower, flatter and more transparent corporate income tax as a major factor in the improvement, but also warns that the state “has a long way to go” in making sound policy reforms.

Earlier today, co-author of the report (and Michigan native) Jonathan Williams told Michigan Capitol Confidential the following: “The repeal of the MBT was a good down payment on Michigan’s future prosperity, but additional steps must be taken to cement Michigan’s status in the top tier of states. These steps might include reductions in both the personal income tax, and the personal property tax as well as labor reform.”

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