 Originally posted at Texans for Fiscal Responsibility. Texas ranks 7th in the 2025 State Tax Competitiveness Index, benefiting from its lack of an individual income tax and a competitive unemployment insurance tax system. However, high property taxes, a complex corporate tax system, and excessive government spending, all help to prevent Texas from reaching the top spot. With millions of people and businesses relocating to Texas, the state has a unique opportunity in the 89th Legislative Session to solidify its position as the economic leader by addressing these three key challenges.  What Is the State Tax Competitiveness Index? The State Tax Competitiveness Index, formerly known as the State Business Tax Climate Index, evaluates how effectively states design their tax systems. It ranks states based on five key categories:
States with transparent, low-rate, and neutral tax systems perform best in the index. Top Five Overall States
Texas excels in individual income taxes (ranked 1st due to having no tax) and unemployment insurance taxes (ranked 30th), but its rankings in other areas, particularly property taxes and corporate taxes, highlight significant room for improvement.  While Texas outperforms neighboring states in overall competitiveness, high property tax burdens and a low corporate tax ranking highlight significant barriers to achieving the top spot.
Addressing the Property Tax Challenge Texas ranks 40th in property tax competitiveness, primarily due to its heavy reliance on local property taxes to fund public services. Local governments impose some of the highest property tax rates in the nation, with school district maintenance and operations (M&O) property taxes comprising nearly half of total property tax collections. Recent reforms provide some relief but fail to address systemic issues. To achieve meaningful property tax relief, Texas must use its state budget surplus to buy down school district M&O property tax rates, aiming to eliminate them in about a decade. This approach ensures sustainable relief without compromising funding for essential services. Reforming the Corporate Tax System Texas’s gross receipts tax, known as the business franchise or margin tax, ranks 46th in corporate tax competitiveness. This tax applies to gross revenues rather than net profits, making it especially burdensome for businesses with low-profit margins. Phasing out the margin tax would simplify the corporate tax system, attract investment, and improve Texas’s competitiveness. Spending Restraint: The Foundation for Sustainable Reform Unchecked government spending is the root cause of Texas’s tax challenges. As TFR’s Frozen Texas Budget outlines, excessive state and local spending drives high property taxes and undermines long-term prosperity. To address this, Texas must adopt constitutional spending limits with a maximum rate of population gr owth plus inflation at both the state and local levels, but there is a need for spending cuts in the near term to correct past excesses. This disciplined approach prevents budget bloat and ensures that fiscal deficits or future tax hikes do not follow tax reductions. Strategic Recommendations for Texas Policymakers
Texas is well-positioned to lead the nation in economic competitiveness, but achieving the top spot in the State Tax Competitiveness Index requires bold action. Texas can attract even more businesses and residents by prioritizing property tax relief, corporate tax reform, and spending restraint while fostering a thriving, dynamic economy. Despite cooling inflation, consumer sentiment is still low as its impact continues to weigh on households.
Vance Ginn, president of Ginn Economic Consulting and former chief economist of the Office of Management and Budget, spoke to NTD about the future of the American economy in the next four years. Here's the post by NTD News: https://www.ntd.com/congress-must-act-to-cut-government-spending-economist_1034926.html If More Money Isn’t The Answer, What Will Truly Fix The Education System: Lars Larson Show12/17/2024
 Listen here to my interview on The Lars Larson Show.
 Originally published at Kansas Policy Institute. Kansas ranks 14th in the 2024 Economic Freedom of North America (EFNA) report, reflecting an above-average position among U.S. states. To improve, Kansas must address problems in its tax structure and government spending while leveraging its strengths to catch up with leading states like Florida (3rd), Tennessee (4th), and Texas (5). Neighboring States: How Kansas Stacks Up Kansas is surrounded by states with varying degrees of economic freedom, offering both inspiration and a competitive benchmark:
 Compared to these neighbors, Kansas’s ranking is respectable, but it highlights opportunities for improvement, particularly in areas like taxation and government spending.
Taxation: Challenges and Opportunities Kansas’s tax system remains a weak point, as highlighted by its 25th-place ranking in the Tax Foundation’s 2025 State Business Tax Climate Index.
Government Spending: Curbing Growth Excessive government spending continues to weigh on Kansas’s economic freedom. Over the years, state appropriations have outpaced population growth and inflation, creating fiscal strain and driving higher taxes. For example, if Kansas’s spending since 2005 had been limited to these benchmarks, its budget would be $6.7 billion lower today. To address this, Kansas should implement stricter spending caps and adopt priority-based budgeting to ensure taxpayer dollars are used efficiently. Redirecting savings toward tax reductions would create a more sustainable fiscal environment and reduce the burden on residents and businesses. Labor Market Regulations: A Mixed Bag Kansas ranks 23rd in labor market freedom, reflecting strengths in right-to-work policies and relatively low union influence. However, burdensome occupational licensing laws remain a barrier to workforce mobility and entrepreneurship. Simplifying licensing requirements and expanding reciprocity agreements with other states would attract skilled workers and help Kansas build a more dynamic workforce. This is especially important for low-income residents seeking upward mobility. How Kansas Can Improve Kansas has the potential to rise in economic freedom rankings with targeted reforms. Key priorities include:
Kansas has made progress in economic freedom, but challenges in taxation and government spending hinder its potential. By learning from its neighbors and addressing inefficiencies, Kansas can strengthen its position and attract more businesses, residents, and investment. The path forward is clear: lower taxes, control spending, and reduce barriers to work. By taking these steps, Kansas can lead the region in economic freedom and secure long-term prosperity for its people. Welcome to This Week’s Economy podcast! In this episode, we explore the Federal Reserve’s interest rate decision, President-elect Trump’s ambitious early agenda, the potential fallout from a looming TikTok ban, and new state tax competitiveness rankings. Join me as I unpack these pivotal developments, their economic implications, and the actions needed to secure prosperity for all Americans. Watch the episode on YouTube below, listen to it on Apple Podcast or Spotify, and visit my website for more information.
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Vance Ginn, Ph.D.
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