A Free-Market Opportunity in the States

Lawmakers who want to unleash growth and prosperity should prioritize several areas for reform.
January 2, 2017
By Luke Hilgemann  |  Contributor
Chief executive officer of Americans for Prosperity
By Sean Lansing  |  Contributor
Chief operating officer of Americans for Prosperity

The media is fixated on President-elect Donald Trump and the incoming Congress, and for good reason: They're preparing to repeal many of the economically harmful laws and regulations enacted over the last eight years. But this ignores the critical role that states can play in unleashing growth, opportunity and prosperity.

Given Washington, D.C.'s ever-growing power, it's easy to forget that state lawmakers play an important part in improving their constituents' lives. You need only look at the difference between Illinois and Indiana, or between New York and North Carolina, to see how pro-freedom policies can transform a state's fortunes for the better.

We've already gotten a taste of what's possible. During President Obama's eight years in office, more and more state leaders have taken it upon themselves to enact free-market reforms. Whether it's tax cuts in Tennessee, right to work in Wisconsin or ending special-interest handouts in Florida, the past 24 months have seen some of the best state-level advances in decades.

But there's much more to be done. As legislatures convene, there are several broad policy areas that lawmakers should prioritize for reform. These include:

Taxes: Slashing individual and corporate tax rates -- or better yet, eliminating these taxes entirely -- is a tried and true way to boost economic growth, create jobs and grow wages. It's Economics 101: When individuals and businesses have more disposable income, they invest it in their communities. Other taxes should be on the chopping block too, such as franchise taxes on business revenue and "death taxes" on property passed from one generation of a family to the next.

Spending: State lawmakers must also analyze their budgets to ensure that taxpayers are getting the best bang for their buck. There isn't a state in America where that's currently the case, although some states are better than others.

Wasteful spending can take many forms, but one of the most common involves taxpayer giveaways to special interests -- especially through so-called "economic development funds" that hand out subsidies and tax breaks to chosen corporations. Other areas where lawmakers should cut bloat include unnecessary infrastructure programs that eat up gas-tax dollars intended for roads and bridges; insolvent public pension funds that are putting workers and taxpayers alike at risk; and the alphabet soup of state agencies that spend taxpayers' money issuing regressive and unnecessary regulations.

Labor: State labor laws are often some of the most outdated and anti-freedom statutes on the books; they should be repealed or significantly amended. This includes occupational licenses, which are essentially government-required permission slips for entry- and mid-level jobs, as well as prevailing-wage laws that jack up the cost of public projects. Perhaps the most important labor reform, however, is a right-to-work law. Just under half the states still force many workers to pay unions as a condition of employment even though states that don't have seen faster population growth, wage growth, job growth and economic growth for decades.

Health care: State lawmakers have a few options to move health care in the right direction. Repealing so-called "certificate of need" laws, which limit the construction of new medical facilities, would empower innovation from medical providers. Expanding the "scope-of-practice" for providers such as nurse practitioners would increase competition and access to care, as would expanding telemedicine, which is especially beneficial for rural communities. All three of these reforms would lower health-care costs at a time when they're rising across the board.

Education: Few policies are as important as expanding educational choices, especially for students stuck in failing public schools and unable to afford private school. There are plenty of options for state lawmakers to consider, from public charter schools that are freed from union mandates to scholarship programs that give students access to non-public schools to education savings accounts that give families freedom to pick the educational options that are best for their children.

These are only a few of the pro-freedom policies that should take the statehouse stage in 2017 and beyond. The bottom line is that governors and state legislators have a tremendous opportunity to break down barriers to opportunity and unleash economic growth.