A Leg Up in the Search for Prosperity: Economic Freedom

29 Jun 2020


In the interstate economic-development wars, few rivalries can match the long-running one between California and Texas. At a time when so many Americans have such sharply divided attitudes on the proper role of government, these states illustrate the extremes. They're both also thought to be, in their own way, models of success, yet they have very different outcomes.

Texas is best understood as a place where the private sector prevails over the public sector. Among the 50 states, it ranks near the top in economic freedom, a measure of fiscal and regulatory policy, and near the bottom in overall tax burden. It's a state known for building, with Dallas and Houston routinely among the top metros in new home permits and Austin first in the nation for permits per capita since 2004. But state and local government spending per capita is the 11th-lowest of any state, according to data from the Tax Policy Center.

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