The American Legislative Exchange Council (ALEC) just released its economic competitiveness ranking of the 50 mainland states for 2007. If you've been following this Fool around the map, looking for localized investment opportunities, I don't think the results will surprise you very much.

Stumbles and tumbles
According to ALEC, favorable tax rates -- both corporate and personal -- are sucking business out of the traditional Nor'easter economic powerhouses and into the South and Midwest, write the authors. That's bad news for Massachusetts, New York, and Pennsylvania, but great tidings to governors in Arizona, Texas, and Utah.

My own Florida owns the fastest-growing population in the Union, thanks to no income tax and a retirement-friendly climate. We don't score very well in per-capita income metrics, but growth and a very high employment rate count for a lot.

California is suffering from the same kind of overtaxation issues that drive companies out of the Northeast. "California and New York share little in common, other than their movement in a pro-government intervention direction in recent years," reads the report. "They both stand out as flashing billboards for what states should not do if they want to gain income and wealth." (Emphasis in the original.)

Given the policy missteps the report highlights, I'm almost surprised to see Disney (NYSE:DIS) stay put in Hollywood, rather than moving to Orlando, or Citigroup (NYSE:C) staying in NYC instead of hobnobbing with the other banks in North Carolina.

If it ain't fixed, don't broke it
ALEC takes cues from Ireland in suggesting constructive ideas to kick-start slow growth in tax-troubled regions. Between 1991 and 2004, the Celtic Tiger roared from worst to first in Europe when it came to average income. International giants like Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), and Bristol-Myers Squibb (NYSE:BMY) moved in to take advantage of the newly vibrant economy, and the rest is recent history. How did the Irish do it? Through free enterprise and tax cuts.

Keep in mind that ALEC has an ax to grind. It's an openly Jeffersonian organization that wants to promote "free markets, limited government, federalism, and individual liberty." And some of the data points do look cherry-picked -- New York and Boston might look better if you included some criteria of higher education, for example.

Even with those caveats in mind, it's still hard to reject the population movements and personal wealth data outright, when considered in light of tax rates and regulation loads. Maybe Michigan could rise again under a rejuvenated Ford (NYSE:F) or General Motors (NYSE:GM), if the state government would keep its fingers out of their business -- and pocketbooks.

Take it away, Fool!
2008 is an election year, and we're sure to see some inventive promises from would-be state governors and legislators. Will the "Governator" give way to a spendthrift, tax-cutting Democrat? Can Florida turn its population growth into wealth? We'll just have to vote and see. There may be other, better roads to El Dorado, but at least that smart-ALEC report gives us a starting point for discussion.

Intel and Microsoft are Motley Fool Inside Value picks; Disney is a Motley Fool Stock Advisor recommendation.

Fool contributor Anders Bylund is a Disney shareholder, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will always be there for you.