States without an income tax accounted for a disproportionate 28% of U.S. job growth from 2010-2019

Yesterday, I noted how states without a state income tax – Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming – accounted for a disproportionately large share of U.S. Gross Domestic Product (GDP) growth in the decade before COVID-19 hit. The same is true for employment.

In 2010, these seven states accounted for 18% of total employment in the United States; in 2019, they accounted for 19%. In other words, over those years employment grew faster, on average, in states without a state income tax than in states with a state income tax.

Indeed, as Figure 1 shows, states without a state income tax – which accounted for 17% of total employment in the United States in 2010 – accounted for 28% of the total employment growth in the United States between 2010 and 2019.

Figure 1: 2010 GDP and 2010 to 2019 GDP growth, United States

Source: Bureau of Economic Analysis and Center of the American Experiment

Again, none of this is to downplay the task facing someone who wanted to eliminate Minnesota’s income tax. But a state where economic growth and job growth have lagged national rates since at least the turn of the century ought not to be so quick to dismiss the experience of states that have performed better.