This ranking of Texas surprises many readers (especially Texans!). After all, isn’t the Texas economy rather successful? Millions of Americans have moved to Texas in the last twenty years, especially from uber‐left states like California. Isn’t this the best proof that the red‐state model works?
Texas has indeed gotten two big things right: loose local land‐use regulation and no state personal or corporate income tax. The first policy provides abundant housing at lower costs. Businesses are attracted not just because they pay no tax on profits earned there. They can also pay lower nominal wages but still hire workers who enjoy a lower cost of living in Texas.
As a result, Texas has grown. Between 2010 and 2020, its net domestic migration rate was 5.2 percent, according to the Census Bureau. Not bad. Yet Texas’ net domestic migration rate between 2010 and 2020 was just 12th in the country. Its rate between April 2020 and June 2022 (the latest available date) was 11th.
People talk about migration to Texas because the absolute numbers are huge, but the absolute numbers are huge because Texas is such a big state. As a proportion of their size, in‐migration has been far more significant in places like Nevada, Idaho, and South Carolina.
Economic growth is a similar story. The Bureau of Economic Analysis’ real personal income data tell us that Texans’ incomes grew by 3.0 percent per year between 2008 and 2021. Again, not bad. But that was 11th in the country. By contrast, California grew by 3.2 percent per year during that period, putting it into 9th place.
Still, the only other solid‐blue state in the top 11 was Washington (3.4 percent), which lacks a personal income tax. A good case can thus be made that red‐state economic policy attracts residents and business investment – or at any rate, that deep‐blue‐state policy repels them.
So Texas has done fine. Yet it doesn’t exemplify robust economic freedom. Here’s why.
First, local government is expensive. The Texas local tax burden is the 5th highest in the US, and the local debt burden is high too. (All those shiny new high school football stadiums are expensive!)
This wouldn’t be a problem if local governments were highly responsive and accountable to residents. But Texas’ complex school finance formula means that much of the revenue raised in some districts is shipped out of district. In fact, the state actually incentivizes many districts to raise taxes higher to receive what is effectively a kind of matching grant. Nominally “local” property taxes in Texas are in reality anything but.
Second, Texas has lots of regulations in certain areas. In fact, it’s the last‐place state in Freedom in the 50 States’ index of occupational freedom. The Archbridge Institute’s comprehensive survey of licensing barriers finds that Texas has the second‐most “barriered” occupations in the country.
Like other southern states, Texas has a powerful state medical association that successfully lobbies to limit advanced practice registered nurses’ scope of practice. The Texas legislature has been eager to mandate health insurance coverages beyond the federally defined “essential benefits.” It also ties the hands of insurers that try to use the HMO “gatekeeping” model to keep costs down. Texas also has had problems with its tort liability system. Texas jurisdictions have periodically shown up on the “Judicial Hellholes” list maintained by the Americans for Tort Reform Foundation.
Third, Texas lags on personal freedoms. Texas’ “lock ‘em up and throw away the key” approach to criminal justice might or might not make sense for violent crimes. But it’s surely unreasonable that the state can sentence you to life in prison for a single marijuana conviction that does not involve children.
Nor is privacy exactly a priority: Texas actually requires a thumbprint on file from every driver. For a long time, Texas’s security‐first orientation meant that open carry was banned and concealed carry strictly regulated. While the state now has joined the “constitutional carry” ranks, some small restrictions still set Texas apart from the very freest states on this issue.
Civil asset forfeiture is an example of how law enforcement interests trump property rights in Texas. Authorities can seize private property and then forfeit it by a mere preponderance of the evidence showing. Citizens bear the burden of proof when they want to make an innocent‐owner claim. Under some circumstances, the revenue from forfeiture accrues to law enforcement. That incentivizes policing for profit.
Education freedom remains a hot‐button issue in Texas. Right now the state doesn’t regulate private or home schools very much. But it also doesn’t have any educational choice programs at all, a glaring disability for a conservative state. The governor has been pushing, and after largely successful Republican primaries for choice advocates it seems likely that next year the state will finally get a robust choice program.
Texas does several big things really well, and I’m rooting for them to improve elsewhere. But let’s not pretend Texas is the free‐market archetype for the country. Florida, Arizona, South Dakota, and New Hampshire are more pro‐freedom than Texas. They’re just not as loud about it.
