#16 Indiana

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The overall freedom ranking is a combination of personal and economic freedoms.

From 2009

Indiana State Overview

State Facts

Net Migration Rate (?) -0.4 % 
Personal Income Growth (?) 0.89 %
How does the freedom ranking relate to these?


Indiana is one of the rare outposts of freedom among the Great Lakes states. Nevertheless, it could do more to improve, especially in the fiscal policy dimension.

Fiscal policy has deteriorated in Indiana, and the state is now ranked well below average. While between 2006 and 2008 local governments were responsible for most of the rise in debt, between 2008 and 2010 the state government was the main culprit. Virtually all the increase in state government debt came in the form of “long-term public debt for private purposes,” which increased from $9.8 billion to $13.2 billion in FY 2010. On the other hand, the slight rise in tax burden is entirely attributable to local governments. The total state tax take fell from $15.1 billion (FY 2008) to $13.9 billion (FY 2010), while the local take rose over the same years from $8.5 billion to $9.5 billion, even as personal income fell.

While fiscal policy tells a dire story, Indiana is number one in the nation on regulatory policy. The state has also improved noticeably since 2007, when it was eighth. Indiana has comprehensively deregulated telecom and cable. Local zoning is among the least strict in the nation, but the state needs to go further to clamp down on the potential for eminent domain abuse. Indiana passed a right-to-work law in 2012—that change alone would have been enough to boost Indiana three spots on overall freedom in this edition. Indiana licenses the third-fewest occupations in the country as a percentage of its workforce, but it heavily regulates the health professions. Its court system is among the best.

Gun control has not gotten far in Indiana. The state has good education laws, with very light regulation of home and private schools, but it has recently expanded the mandatory years of schooling from nine to eleven. Blue laws restrict alcohol freedom. The Republican legislature recently enacted the state’s first comprehensive smoking ban in workplaces, including restaurants. Gambling laws are odd but make sense in a public-choice, “bootleggers and Baptists”1 fashion: the state depends heavily on revenues from casinos, but it also bans social gaming, makes unauthorized gambling a felony, and has enacted a ban on Internet gaming. Asset forfeiture laws are good, but to make them effective the state must ban equitable sharing with the Department of Justice. Incarceration rates are high, but drug arrests are low.

Policy Recommendations

  • Reduce debt and sales and income taxes by cutting spending on public welfare, libraries, housing and community development, and education, areas where Indiana spends more than average.
  • Legalize independent practice by nurse practitioners and dental hygienists, join the Nurse Licensure Compact, and allow physician assistants and nurse practitioners full prescription authority.
  • Repeal blue laws, which prevent Indiana from being one of the top states for alcohol freedom.
1. Bruce Yandle, “Bootleggers and Baptists—the Education of a Regulatory Economist,” Regulation (May/June 1983): 12—16.
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