Tenn Capitol Building
The American people continue to vote with their feet, moving from high-tax blue states to red states with lower overall tax burdens, according to updated interstate migration data recently released by the U.S. Census Bureau. In fact, no-income-tax states and those with relatively low, flat income tax rates remain among the top recipients of new residents through domestic migration, the new Census data shows.
However, as the Wall Street Journal’s Allysia Finley noted on a recent episode of the Potomac Watch podcast, “it’s not just taxes, there are a variety of policies that these states are enacting that make them more attractive than these other states.” Chief among the non-tax-related policies making high-growth states so attractive to new residents and investment is cost-reducing regulatory reform Regulatory Freedam Act approved by Tennessee lawmakers this week.
Take Tennessee, which is not only a no-income-tax state, it boasts the nation’s third lowest overall average tax burdens. This week, on the afternoon of April 13, the Tennessee House voted to pass House Bill 1913, the Regulatory Freedom Act, legislation modeled after the federal REINS Act that subjects the most costly regulations to an up or down vote of the legislature. Three days later, the Tennessee Senate voted in favor of final passage, sending HB 1913 to the Governor’s desk. When Gov. Bill Lee signs the Regulatory Freedom Act, Tennessee will become the 14th state with its own form of REINS Act.
“By enacting the Regulatory Freedom Act, Gov. Bill Lee and Tennessee legislators are making one of the nation’s most hospitable tax and regulatory climates even more attractive,” said Grover Norquist, president of Americans for Tax Reform. “Other states are seeking to emulate Tennessee by phasing out their income taxes. It’s great to see Tennessee follow the lead of other states that have enacted REINS-style reforms that will help keep regulatory costs in check.”
Senator Marsha Blackburn (R-Tenn.) passed the Tennessee General Assembly’s passage of the Regulatory Freedom Act. “Tennessee ought to be the most business-friendly state in the nation, and the work of our legislature is helping make that a reality,” Sen. Blackburn, who is the front-runner to succeed Bill Lee as Governor, said in a statement posed to X. “Thank you to everyone who helped get this across the finish line – it’s another great day for the Volunteer State!”
The South Carolina House of Representatives passed their own version of the Regulatory Freedom Act last year. That bill is now awaiting consideration in the South Carolina Senate Judiciary Committee, but time is running out on this year’s session.
South Carolina’s Regulatory Freedom Act, in addition to implementing a REINS-style mechanism subjecting costly regulations to an up or down vote of the legislature, also includes a regulatory sunset process of the sort recently passed as standalone legislation in Wisconsin. However, that Wisconsin sunset bill was vetoed last month by Gov. Tony Evers (D). Not surprisingly, many lawmakers in Wisconsin wish they had included such a sunset provision in their REINS Act, which they enacted back in 2017, becoming only the second state to do so at the time (the other being Florida).
The legislative package vetoed by Gov. Evers, dubbed the ‘Red Tape Reset,’ would’ve built upon Wisconsin’s existing REINS Act, adding further safeguards against the imposition of costly and unnecessary regulations. Senate Bill 277 would’ve prevented outdated regulations from remaining law by requiring reapproval every seven years, while Senate Bill 289 would’ve required agencies to offset new regulations by modifying and/or repealing existing ones.
Under SB 289, if the agency proposing a new regulation could not provide this, then the new regulation would have to be confirmed by a vote of the legislature. A study by the Wisconsin Institute for Law & Liberty (WILL) found that the 40% reduction in state regulations resulting from enactment of this regulatory reform package would’ve added as much $68.1 billion to Wisconsin’s GDP by 2037.
Enactment of the Regulatory Freedom Act in South Carolina would bring the number of states with such a safeguard on the books to 15. However, given the South Carolina Senate Judiciary Committee Chairman’s apparent unwillingness to hold a hearing on the Regulatory Freedom Act, the only way the bill will get a vote in the South Carolina Senate is if leadership pulls the bill out of committee and brings it to the floor, which they have they power to do.
Meanwhile, on Capitol Hill, Congresswoman Kat Carmack (R-Fla.) and Senator Rand Paul (R-Ky.) have filed federal REINS Act legislation. Despite President Donald Trump’s endorsement of the federal REINS Act, it remains to be seen whether congressional Republicans will vote to send the bill to the President’s desk prior to the midterm elections this November, when Democrats are projected to take back control of at least the House, meaning that the next opportunity to enact a federal REINS Act won’t be until January 2029 at the earliest.
Regardless of what happens with the federal REINS Act, the expansion of similar state-level safeguards across more of the country is likely to continue. This underscores how, even at a time when state legislators are aggressively competing to lower tax rates and overall tax burdens, lawmakers have not lost sight of the need to tame regulatory costs.
Update (April 17): On April 16, the same day the Tennessee House voted for final passage on the Regulatory Freedom Act, the South Carolina Senate Judiciary subcommittee voted to advance their RFA, but not before stripping the REINS provision from the bill. Americans for Tax Reform is joining with a coalition of conservative organizations in South Carolina calling on the Senate Judiciary Committee to restore this REINS provision so that the RFA will once again require costly regulations be put to an up or down vote in the legislature.
