"Rich States, Poor States" highlights Tennessee's success - and Kentucky's failure

A good way to judge one’s placement in any competition is a comparison with one’s closest, most similar adversaries. If we’re talking about a state’s economic performance and outlook, the relevant competition for Kentucky is its closest neighbors in states like Indiana and Tennessee.

Taking a look at Kentucky’s economic performance in the most recently released edition of the American Legislative Exchange Council’s (ALEC’s) “Rich States, Poor States,” Kentuckians should be a bit disappointed in how the Bluegrass State placed compared to its its neighbors.

Actually, Kentuckians should be extremely disappointed.

Why? Well, because the differences in economic policy and outlook between Kentucky and Tennessee was so stark that Arthur Laffer and the co-authors of the report actually decided to use Kentucky and Tennessee as a specific example of how two similar states which differ only in economic policy can have profoundly different economic outlooks.

Unfortunately, Kentucky wasn’t used as the shining example in this comparison, but the cautionary tale.

Below is an excerpt of the comparison – and it’s as close to anything the social sciences will get to resembling a laboratory experiment.

Policy Instrument Tennessee Kentucky

Top Marginal Personal Income Tax Rate 0% 8.2%

Top Marginal Corporate Income Tax Rate 6.5% 8.2%

Total State & Local Tax Revenue as % of GSP 7.34% 8.9%

Right to Work?

Yes No

Economic Outcomes

Change in Personal Income over past 30 years 430.9% 338.5%

Unemployment Rate 9.7% 10.4%

Let’s hope Kentucky starts to follow Tennessee’s racing example instead of continuing to watch from the sidelines as Tennessee and its economic outlook zoom on by.