#3 Tennessee

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

From 2009

Tennessee State Overview

State Facts

Net Migration Rate (?) 4.7 % 
Personal Income Growth (?) 1.62 %
How does the freedom ranking relate to these?


Tennessee is one of the freest states in the country, placing just behind the Dakotas at the top of the rankings. Like the Dakotas, it fares better on economic freedom than personal freedom. However, the disparity between its economic and personal freedom scores is not as extreme as in South Dakota. The state’s level of freedom and relative ranking have slipped slightly since 2001, when it was second in overall freedom.

Tennessee does particularly well in fiscal policy. The state has the fourth lowest tax collections in the country (at 7.5 percent of personal income). It also has a relatively low government debt ratio and about average spending (though outlays for utilities are high). Government employment is relatively low and the state is among the most fiscally decentralized.

Tennessee fares only a bit worse in the regulatory sphere. It is strong on labor market freedoms and is a right-to-work state. Its liability system, health insurance regime, and property rights protection are in the top 20. Tennessee has a below-average number of mandated health insurance coverages. It has deregulated cable and telecom. Tennessee ranks quite poorly on occupational freedom, with an excessive number of jobs requiring a license. Eminent domain has not really been reformed.

Unfortunately, the Volunteer State is not all that committed to voluntarism in the personal sphere. It is mediocre on victimless crimes arrests, tobacco freedom, and asset forfeiture. Cigarette taxes remain low. However, it has banned smoking in restaurants and added restrictions on smoking in bars and private workplaces. Tennessee is less prone to arrest people for victimless crimes, excluding drugs, than other states. However, its drug enforcement regime and marijuana laws are on the harsh side. Taxes on wine and spirits are a bit below average, but the beer tax is the highest in the country. Tennessee has some of the most restrictive gaming laws. It does allow charitable gaming. Travel freedom is limited. Tennessee requires helmets for all cyclists and authorizes sobriety checkpoints. It has not banned the use of handheld cell phones while driving. Tennessee also falls somewhat short on education, although homeschooling is expressly permitted by statute. It has mandatory kindergarten attendance, burdensome notification requirements for homeschoolers, and other constraints. Along with West Virginia and Kentucky, Tennessee has the best gun control laws in the South.

Policy Recommendations

  • Reduce government spending, especially on utilities. Tennessee is one of the few states where electric and gas utilities are mostly municipalized. These could be privatized and restructured to promote consumer choice and competition.
  • Reduce the number of occupations that require state licensure.
  • Relax the state’s drug enforcement regime. Even if Tennessee had only reformed to the level of national averages, it would have leapfrogged five states in terms of personal freedom and moved into the second overall spot. Also, reduce the beer tax to make it consistent with regional and national norms.
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