Livin' Free And Loving It: New Hampshire Is The Freest Place In North America 24th Year In A Row

By Michael Graham, NH Journal

New Hampshire is once again the freest place in North America, according to the new Economic Freedom of North America (EFNA) report released Tuesday by the Josiah Bartlett Center for Public Policy and Canada’s Fraser Institute. But while the Granite State held onto the top spot, other red states like Tennessee are closing the gap.

New Hampshire scored 8.34 out of 10 in this year’s index, which evaluates all 50 states, the Canadian provinces, and 32 Mexican states using 2023 data on government spending, taxes, regulations, and labor-market restrictions. It’s the 24th time New Hampshire has claimed the top spot.

But Tennessee—now aggressively marketing its low-tax environment—finished just 0.04 points behind, with a score of 8.30.

One significant change is the state’s 2021 move to abolish its “Hall” income tax, a 6 percent levy on dividends and interest income similar to New Hampshire’s “Interest and Dividends” tax repealed at the beginnnig of this year. New Hampshire’s repeal won’t factor into the EFNA rankings until 2027.

“Economic freedom has made New Hampshire an engine of growth and prosperity in the Northeast,” said Bartlett Center President Andrew Cline. “Yet this year’s report is also a warning that ambitious leaders in other states are striving to claim the title of freest state for their own recruitment and marketing purposes, and they’re very close to doing that.”

In an ironic twist of timing, the report was released the same day as a special election where Democrat Aftyn Behn — the “AOC of Tennessee,” as she’s been labeled — is running a surprisingly competitive race in the 7th Congressional District.

Since the Fraser Institute began publishing the EFNA index two decades ago, New Hampshire has ranked No. 1 in 24 of the 27 years studied in the international index and 24 of the 43 years covered in the U.S.-only version.

The state’s strongest scores continue to come from government spending restraint and its low tax burden. But the index shows New Hampshire hovering closer to the national average on labor-market freedom—an area where Cline says policymakers may want to focus if they want to keep the state ahead of its rivals.

The EFNA evaluates labor factors such as minimum-wage rules, union density, labor-regulation rigidity, and barriers to contract flexibility.

“People are more economically free when they are allowed to make more of their own economic choices,” said Matthew Mitchell, a Fraser Institute senior fellow and co-author of the report. “Researchers find that as government limits these choices, people tend to be worse off.”

Dean Stansel, an economist at Southern Methodist University and co-author, said the link between economic freedom and human well-being is well-established.

“The link between economic freedom and prosperity is clear,” Stansel said. “People who live in jurisdictions that have comparatively low taxation, limited government, and flexible labor markets tend to live happier, healthier, and wealthier lives.”

The report always highlights the growing chasm between New Hampshire and the rest of New England. Only one other state, Massachusetts, even cracked the top 25, while three states are in the bottom 10: Maine, Rhode Island and Vermont.

Rounding out the top five freest U.S. jurisdictions were:

• Tennessee (2nd)
• South Dakota (3rd)
• Texas (4th)
• Idaho (5th)

At the bottom:

• California (47th)
• Hawaii (48th)
• New York (49th) — no longer last for the first time in nearly 20 years
• New Mexico (50th among U.S. states)
• Puerto Rico (last overall) — 1.74 out of 10

The EFNA report is co-authored by José Torra of Caminos de la Libertad in Mexico City and Ángel Carrión-Tavárez of the Instituto de Libertad Económica in Puerto Rico, and is part of the long-running Economic Freedom of the World project built by more than 60 researchers, including three Nobel laureates.

See the full report at www.freetheworld.org.

This story was originally published by the NH Journal, an online news publication dedicated to providing fair, unbiased reporting on, and analysis of, political news of interest to New Hampshire. For more stories from the NH Journal, visit NHJournal.com.