Ohio or Texas (or New Mexico)?

With the Democratic candidates for President campaigning in Texas and Ohio ahead of Tuesday’s primaries, both states have become the focus of attention. As the Wall Street Journal points out, the states have pursued very different economic paths and achieved opposite results.
On one hand, Texas has no state income tax and is a right to work state (no forced unionism). The result has been that Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation’s top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs.
Ohio, on the other hand is not a Right to Work state and it imposes the third highest corporate income tax in the country (10.5%) and the sixth highest personal income tax (8.87%).
So which state is New Mexico more like? Well, New Mexico is not a Right to Work state and, while our taxes may not be quite as high as Ohio’s, our gross receipts tax places a special burden on businesses that is not found in other states. Unfortunately, until New Mexico reduces its tax and regulatory burdens, it will continue to be more like Ohio than Texas and from an economic perspective, that’s a shame.

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