We're No. 5

COEUR d'ALENE - Idaho is flush with the prospect of economic prosperity.

A new study released this week places the Gem State fifth in the nation for its economic outlook potential and 10th in actual economic performance last year.

Using years of economic data and empirical evidence from each state, the American Legislative Exchange Council identified a number of state policies that could lead to economic prosperity, and three policy-driven indicators of economic performance.

Economist Dr. Arthur Laffer, Heritage Foundation chief economist Stephen Moore and Jonathan Williams, of ALEC, authored the study, which is called "Rich States, Poor States."

The study not only identifies these policies but also makes sound research-based conclusions about which states are poised to achieve greater economic prosperity and which are stuck on a path to a lackluster economy.

The 2014 Economic Outlook Ranking is a forecast based on a state's current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process, the study said.

Idaho ranked No. 1 in three categories. Those categories include no estate taxes, low minimum wage and being a right-to-work state.

The state's worst ranking was 37th in the top marginal personal income tax rate. It ranked 36th in personal income tax progressivity, the study said.

Generally speaking, the authors said states that spend less - especially on income transfer programs, and states that tax less, particularly on productive activities such as working or investing - experience faster growth rates than states that tax and spend more.

The Economic Performance Ranking is a backward-looking measure based on a state's performance on three important variables. Idaho ranked 16th in state gross domestic product for cumulatively growing 54.4 percent during the 10 periods between 2002 and 2012. The state ranked 14th in absolute domestic migration, gaining nearly 95,000 residents in the same time period. Idaho was eighth in non-farm payroll employment with 9.7 percent cumulative growth.

All three categories are highly influenced by state policy, the study said.

The state that ranked the highest on the economic outlook ranking was Utah, and New York ranked at the very bottom of the list. Neighboring Washington ranked 38th in the outlook ranking, but scored sixth place in economic performance.