The economic picture of Texas is often compared with states that have similar economic output, demographics, and natural resources-such as California. These comparisons provide valuable information about which public policies work and which ones do not.
Texas' governing philosophy revolves around limiting government spending to basic public necessities so that hard-working Texans can keep more money in their pockets. California, on the other hand, tends to favor heavy regulation, government spending, and high taxes-it currently has the highest top income tax rate in the nation-which tends to reduce individual liberty and economic prosperity.
The economic success of Texas has a proven record with 381,100 net jobs added in only the last year through May 2014-the largest annual increase in 17 years. This boils down to a 3.4 percent annual job creation rate, which is almost 50 percent faster than the job creation rate over the last year in California. This increase in jobs keeps Texas' unemployment rate of 5.1 percent well below those in more fiscally liberal states like California (7.6 percent) and New York (6.7 percent).
[[{"type":"media","view_mode":"media_original","fid":"13573","attributes":{"alt":"","class":"media-image","height":"351","style":"display: block; margin-left: auto; margin-right: auto;","typeof":"foaf:Image","width":"551"}}]]
When studying the success of a state, it's imperative to consider the average citizen's desire to live in a state. Ronald Reagan once said that people "vote with their feet." This is an important concept when discussing economic sustainability.
This concept that Reagan points to is what allows America to thrive. Each state has different policies and competes with others to see what contributes to better economic and social outcomes. With this major theme of federalism integrated into American culture, Texas has discovered that modest government spending and low taxes contribute to better results relative to states that do otherwise.
Consider a comparison of Texas and New York. New York has championed itself as the financial center of the world, but has performed poorly with a slow recovery in the wake of the financial crisis. Texas has not only had faster economic growth and a lower unemployment rate than New York, but Texas' four largest cities rank in the top 10 for fastest growing cities in the nation. Meanwhile, New York's Buffalo and New York City rank in the bottom 20. It's no coincidence that these four Texas cities also land on CNN's list of most business-friendly cities. Austin ranks number one with Houston ranking 3rd, San Antonio 5th, and Dallas-Fort Worth 7th.
New York has what people call "the big ugly" budget process that obtains the third largest amount of state debt behind the federal government and California. This uncontrollable spending with a tax-everything philosophy produces high unemployment and discourages businesses and markets to thrive.
The bottom line is this: states that limit government spending and resist high taxes-like Texas-have the best chance to top the economic performance of those states that don't. States that understand fiscal responsibility will foster an environment that promotes job growth, business innovation, and individual prosperity.
"