New Study Shows ‘Red’ States Have Highest Economic Potential

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A new study shows that states that are “red” have a better shot of raking in the green.

The study, which was conducted by the American Legislative Exchange Council (ALEC), ranked all 50 states in terms of their economic outlook. ALEC found that states that usually vote Republican had the greatest economic potential.

This is the sixth time that ALEC has conducted the "Red States, Poor States" study. It evaluates states based on 15 factors including tax rates, labor policies and minimum wage laws. Utah topped the list for the sixth year in a row.

"The real key to Utah is low tax rates, but more than that a predictable tax climate," said Jonathan Williams, with ALEC. "Utah legislators are very conscientious about the fact that they don't spend beyond their means and also they don't make changes in tax policy retroactively.  They make changes very gradually and they generally make them in a lower tax direction."

States with higher taxes and tighter restrictions on business development tend to usually end up at the bottom of the list. “Blue" states New York and Vermont are the last two states on the list this year, Fox News reported.

That said, there are some who say Utah is not necessarily an ideal model for economic growth. "It's hard to say that states should try to pattern themselves after Utah," said Tracy Gordon of the Brookings Institution.

"So for example, I know the authors are not fans of the income tax, but in good years the income tax performs very well in states like New York and California that rely on it heavily. So should California and New York try to look more like Utah? Probably not," Gordon said.

Williams, who co-authored the study and also serves as the director at ALEC's Center for State Fiscal Reform, summed it up like this:

"States with lower taxes and less regulation outperform those that pursue Keynesian-style public policies. And people are voting with their feet in favor of these states."

Sources: Fox News, News.Investors.com