California's Economic Prospects Are Bleak, New Report Says

By Tom Joyce | The Center Square contributor, The Center Square California

April 13, 2023

(The Center Square) - "California has a better-than-average state economy, but its prospects are bleak," according to the newly released Rich States, Poor States report from the ALEC-Laffer State Economic Competitive Index.

The report said that Arizona ranked 18th in the country in economic performance from 2011 to 2021; the report calculated this by looking at the state's domestic migration, non-farm payroll employment, and state gross domestic product.

However, California ranked 45th in economic outlook, indicating that ALEC-Laffer thinks the state’s economy will fall in the rankings in the future.

The rankings knock California's future economic potential for various reasons.

It argues that the state is not business friendly. "Its 13.3 percent top marginal personal income tax rate is the third highest in the country," according to the report, while its 8.84 percent top marginal corporate income tax rate is among the top-10 highest in America. Plus, it is not a right-to-work state, and its $15.50 minimum hourly wage is the second highest in the country.

“California improved three places from its worst-ever rank last year, mostly because the competition for the bottom is fierce,” the report said. “California’s woes are well documented in many ways in the national state policy conversation.

“The future isn’t so sunny in the Golden State,” it later added.

As the report notes, California ranked 48th out of 50 states in economic outlook in last year’s rankings. However, a lack of income tax increases in the past couple of years and the state’s nonexistent estate tax prevented it from falling further in the rankings.

The focus of the work of The Center Square California is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.