West Virginia is one of the worst states in the country for economic freedom, according to the free-market Fraser Institute’s 2020 Economic Freedom in North America report.
In the institute’s rankings, West Virginia scored 4.5 points out of 10, landing the state 49th out of 50 and behind only New York, which scored 4.25. The state ranked 49th in government spending, 47th in labor market freedom and 36th in taxes. The rankings are based on data from 2018.
“West Virginia has one of the lowest levels of economic freedom in the United States, and its economy and people suffer as a result,” Fred McMahon, one of the co-authors of the study, told The Center Square. “It has one of the slowest growth rates in the United States, and wage growth of the poorest has been much slower than the US average.”
The ranking puts states in four categories: the most free, the second quartile, the third quartile and the least free. One of West Virginia’s neighbors also scored as one of the least free: Kentucky at 39th, with a score of 5.45. Ohio ranked in the second quartile, with a ranking of 35th; Maryland and Pennsylvania scored in the second quartile, ranking 20th and 24th, respectively; and Virginia ranked as one of the freest at third, with a 7.62 score.
“Virginia and West Virginia create a natural experiment in the importance of economic freedom,” McMahon said. “Virginia has one of the highest levels of economic freedom in the United States and one of its most dynamic and prosperous economies. West Virginia suffers from one of the lowest levels of economic freedom and has one of the weakest growth rates in the United States.”
The free-market Cardinal Institute for West Virginia Policy partnered with the Fraser Institute for the report. Jessica Dobrinsky, a policy development associate at the West-Virginia-based institute, told The Center Square the state’s ranking came as no surprise.
“Neighbors find themselves at least 10 tiers above us with successes in tax rates and lowered government spending, and it shows,” Dobrinksy said. “The state’s gross state product (GSP) consistently falls whole percentage points below the national average, employment rates decline, and disposable income is the lowest in the nation. Looking to nearby mid-Appalachian states like Tennessee, who ranks fifth in economic freedom and maintains the lowest state debt per capita in the country, will allow us to find ways to improve our tax codes and spending for a more efficient and economically conservative state government.”
Some lawmakers in West Virginia are considering phasing out the personal income tax. Dobrinsky said economic reforms such as this would improve the state’s score and help advance its people, job creation and competitiveness with its neighbors.
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