This includes an average overall ranking for those nine states of 24th based upon three key economic variables with average rankings of 23rd in state gross domestic product (GDP), 29th in absolute domestic migration, and 22nd in nonfarm payroll. Īccording to the American Legislative Exchange Council’s 15th edition of the Rich States, Poor States report that compares the economic performance of the 50 states, the nine states already with a flat income tax rank mostly in the middle of the pack from 2010 to 2020. This is happening in California, where even its wealthy citizens are fed up with sky-high personal income taxes that will worsen when the top marginal tax rate rises to 14.4% in 2024. This will support greater economic growth as progressive personal income taxes disincentivize people to work and live in those states. After a recent court decision, Arizona will also have a flat income tax in 2023 at the lowest rate in the nation at 2.5%. The four states that passed a flat income tax in 2022 were Idaho (starts in 2023), Mississippi (2023), Georgia (2024), and Iowa (2026). The next four states initially with progressive income taxes before improving to a flat income tax were Colorado (1987), Utah (2007), North Carolina (2014), and Kentucky (2019). The five states always with a flat income tax were Massachusetts (1917), Indiana (1965), Michigan (1967), Illinois (1969), and Pennsylvania (1971). And this should be tied to spending restraint to avoid the infamous Kansas problem of excess spending while cutting taxes. While flattening income taxes is important, eliminating them is best. But if you consider how the nine states without personal income taxes outperform, on average, the nine states with flat income taxes in economic growth, domestic migration, and nonfarm payroll employment over the last decade, more is necessary.

Now 14 states have or will soon have flat income taxes. This extraordinary feat includes four states passing a flat personal income tax in 2022 after only four did over the last century.

Is the flat income tax revolution underway across the states enough? No, but it must be advanced.

Why not a flat tax