Work to do: Texas ranks 3rd in Economic Freedom of North America index

Work to do: Texas ranks 3rd in Economic Freedom of North America index

In Texas, we celebrate our freedom and pride ourselves on being a business-friendly state. We don’t brag about finishing second, let alone third. According to Economic Freedom of North America report, released by the Canada’s Fraser Institute, Texas ranks just third for economic freedom.

This year, Florida beat New Hampshire and Texas as having the highest level of economic freedom among all U.S. states. It scored 7.87 out of 10 in this year’s report, which measures government spending, taxation and labor market restrictions using data from 2016, the most recent year of available comparable data.

“The freest economies operate with comparatively less government interference, relying more on personal choice and markets to decide what’s produced, how it’s produced and how much is produced. As government imposes restrictions on these choices, there’s less economic freedom and less opportunity for prosperity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.

From 2004 to 2013, the average score for U.S. states in the all-government index fell from 8.24 to 7.66, but increased slightly to 7.9 out of 10 this year, driven largely by changes at the federal level.

In the most-free states, the average per capita income in 2016 was 7.3 per cent above the national average compared to roughly 10.5 per cent below the national average in the least-free states.

“The evidence is clear—lower levels of economic freedom lead to less prosperity, slower economic growth, less investment and fewer jobs and opportunities,” said Dean Stansel, economics professor at Southern Methodist University and co-author of the report.

As Dean Stansel recently indicated on the Urbane Cowboys Podcast the biggest difference between Florida being first and Texas being just third is the Texas Margins Tax. We Agree.

“We believe that work still needs to be done to improve economic freedom in Texas.  We recently joined the Coalition for a Conservative Texas Budget along with the Texas Public Policy Foundation to call for the elimination of the burdensome Texas margins tax. The Tax Foundation calls this one of the worst forms of taxation. In addition to elimination of the margins tax, Texas can improve the business climate by reducing barriers to market entry, such as occupational licenses and liberalizing certain restricted markets.” said Doug McCullough, Director of Lone Star Policy Institute (a member of the Economic Freedom of North America Network).

See the full report at

About the Economic Freedom Index

Economic Freedom of North America measures the degree to which the policies and institutions of countries support economic freedom. This year’s publication ranks 92 provincial/state governments in Canada, the United States and Mexico. The report also updates data in earlier reports in instances where data has been revised.

For more information on the Economic Freedom Network, datasets and previous Economic Freedom of North America reports, visit And you can ‘Like’ the Economic Freedom Network on Facebook at


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The Lone Star Policy Institute is an independent think tank that promotes freedom and prosperity for all Texans. We advance public policy solutions that encourage Texans’ enterprising spirit, expand personal and economic freedom, and improve the quality of life for the people of Texas and in cities throughout the country.