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The Buckeye Institute Releases Economic Freedom of North America 2018

Dec 17, 2018

olumbus, OH – Ohio ranks an unimpressive 38th out of all 50 states in this year’s Economic Freedom of North America report, released today by the Economic Research Center at The Buckeye Institute in partnership with Canada’s Fraser Institute. The report ranks every state and province in North America based on economic freedom, as measured by government spending, taxation, and labor market restrictions.

“For Ohioans, this report paints a concerning picture. Ohio moved up several spots a year ago, driven by Governor John Kasich’s tax reform efforts. Yet, this year, Ohio has stayed in roughly the same position, taking up membership with the bottom third of economically free states,” said Andrew J. Kidd, Ph.D., an economist with The Buckeye Institute’s Economic Research Center. “Ohio continues to lag behind many of its neighbors and, compared to last year’s rankings, is flat lining when it comes to overall economic freedom. When looking at Ohio’s rankings in specific categories, it is easy to understand why so many Ohioans struggle to achieve any form of economic prosperity.”

The latest edition of the report uses a revised methodology to score states for this and prior years. The current year rankings are based on data from 2016 (the latest year data was available). Ohio ranks 38th among the 50 states in overall economic freedom with a score of 5.3 (Florida came in first with a score of 7.87). Ohio’s ranking is down one place from 2017 but an improvement over its rank of 45 two years ago.

Of notable concern is Ohio’s ranking in the insurance and retirement payments as a percent of personal income category, where the state came in last out of all 50 states. This ranking highlights the looming crisis that Ohio faces if it fails to reform its retirement system. In a 2016 Mercatus Center report, researchers found that Ohio had only enough in assets to cover payments for the next decade. Unless Ohio reforms its retirement plans, mounting pension costs will require cuts to critical government services or sharp tax increases.

Ohio’s Ranking in Key Areas

Government Spending – 44th

  • Transfers and subsidies as a percent of personal income – 24th
  • Insurance and retirement payments as a percent of personal income – 50th

Taxes – 29th

  • Income and payroll tax revenue as a percent of personal income – 26th
  • Ohio’s top income tax threshold is $210,600.
  • Property tax and other tax revenue as a percent of personal income – 24th
  • Sales tax revenue as a percent of personal income – 35th

Labor Market Freedom – 34th

  • Minimum wage income as a percent of per capita personal income – 34th
  • Government employees as a percent of total employees – 16th

“What this report shows us is, Ohio can increase the economic freedom offered to its citizens,” continued Dr. Kidd. “Reforms to Ohio’s pension system, controlled and prudent government spending, and a simplified tax code are changes that can make Ohio an economic freedom leader.”

Included in the report is Buckeye’s Ohio Economic Freedom Fact Sheet, which summarizes where Ohio ranks in various economic freedom policies and shows how it compares to neighboring states and the nation as a whole.

The Fraser Institute has measured economic freedom in every state and province in the United States, Canada, and Mexico for 14 years, creating a comprehensive assessment of trends in economic freedom. The Buckeye Institute and its Economic Research Center co-published the report for the fourth year in a row.

The Fraser Institute and The Buckeye Institute are independent think tanks that research and advocate for free-market economic policies. The Buckeye Institute’s Economic Research Center specializes in data analysis of state-level economic policies.

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