Arkansas’ economic outlook is improving

Arkansas’ economic outlook is improving

April 25, 2022 0 By Merrilee Gasser

Arkansas’ economic outlook has improved in recent years, jumping to 16th in the nation, according to a new report.

The ranking by the American Legislative Exchange Council is part of its annual “Rich States, Poor States” report that evaluates states for their economic competitiveness and economic performance. Arkansas’ placement represents the highest it has been on the list in at least the last seven years. In ALEC’s 2021 report it ranked 23rd.

The report determines a state’s economic outlook using 15 economic policy variables.

Arkansas’ top marginal personal income tax rate was 5.5%, and its top marginal corporate income tax rate was 5.9%, the report said. Personal income tax progressivity, which represents the change in tax liability per $1,000 of personal income, was $17.34.

The property tax burden in Arkansas is $17.82 per $1,000 of personal income, according to the report. The sales tax burden was $36.25, leaving the remaining tax burden at $15.79 per $1,000 of personal income.

The analysis found recently legislated tax changes brought a decrease of $0.94 per $1,000 of personal income.

“We’ve been just so pleased to see the governors and legislators leading the way and cutting taxes this year,” said Jonathan Williams, ALEC chief economist and one of the authors of the report. “If we can’t cut taxes in a year like this, when there’s so much money sloshing around in state budgets, we might as well give up the ghost and not even attempt it. This is the year to cut taxes.”

Debt service as a share of tax revenue ranked seventh at 4.32%, according to the report.

Arkansas has around 563 public employees per 10,000 residents. Its state liability system survey, representing tort litigation treatment and judicial impartiality, ranked 30th.

The state minimum wage is $11, which is $3.75 above the federal floor. Average workers’ compensation costs ranked second at $0.72 per $100 of payroll. Arkansas ranked 15th for its number of tax expenditure limits.

Arkansas does not levy an estate or inheritance tax and is a right to work state.

ALEC ranked the state 20th for its economic performance. It determined this based on Arkansas’ gross domestic product, its absolute domestic migration, and non-farm payroll employment. The report said over 14,000 people have moved to Arkansas between 2011 and 2020, with a significant amount of that migration happening in 2020.

The states that performed the best in the report were Utah, North Carolina, Arizona, Oklahoma, and Idaho. Those ranked at the bottom from Nos. 46-50, respectively, were Minnesota, Vermont, California, New Jersey, and New York.

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