Lone Star state 13th in business tax climate
Texas is still a friendly place to do business, in terms of taxes paid, whether that venture is a tech startup, a wine tasting room, or hanging a shingle for an attorney’s office.
Texas ranked 13th overall in a business tax climate among the 50 states, according to a recent story in The Wall Street Journal. The healthy, not-overly-burdensome business climate is one reason why Texans rewarded legislators in last week’s contests. For the most part, Texans like to remain independent and as free of the guiding hand of government as possible.
The insights were provided by The Tax Foundation, a nonprofit which advocates for smarter tax policies that boost economic growth at all levels, and the rankings were profiled in The Wall Street Journal. Both show which states are encouraging a robust business climate, and which ones could use improvement in tax policies which can prove burdensome to business.
The metrics used included rates for corporate taxes, individual income taxes, sales taxes, property taxes and unemployment insurance taxes. While Texas fared poorly in corporate taxes, sales taxes and property taxes — ranking 47th, 37th and 38th in those categories, respectively — it’s because we do not have a state income tax and we rely more heavily on those levies to fund state and local governments. (Interestingly, Texas has ranked 11th, 12th or 13th in all eight years the rankings have taken place.) Bringing up the rear are the high-tax states of California, New York and New Jersey, where the cost of doing business is substantially higher.
While we may see bumper stickers stating “Don’t California My Texas,” there have been plenty of Californians who have chosen to move their business operations here, from huge operations like Tesla automobiles to small businesses (and likely a few winery owners who have found Gillespie County’s environment friendly and welcoming).
Other ranking entities put Texas as “best place to buy a home,” based on affordability and appreciation, along with the economic environment. CNBC has ranked Texas in the top five states for business every year since 2007. It lists Texas as No. 1 for workforce, No. 3 for access to capital, No. 5 for economy and No. 10 for cost of doing business. Texas was also selected as the No. 1 state for business by Chief Executive magazine in 2021 and recognized as the No. 1 exporting state for 20 consecutive years.
While immigration drives a fair amount of population growth, so do these rankings which some look to to help them realize their American dream.
One thing the state will need to be wary of is how all this growth affects our ability to provide necessities like water and electricity. Water is finite yet those 1,000 people a day moving here each poke an additional straw into the aquifer. And our public schools need continued investment to provide students equipped to meet today’s workforce needs.
But the robust business environment remains a huge draw and provides entrepreneurial energy that other states can only dream of.
Texas continues to lead the way in providing a business- and tax-friendly climate, and government in this state mostly stays out of the way. — K.E.C.
15 highest-ranked states for Business Climate:
1. Wyoming
2. South Dakota
3. Alaska
4. Florida
5. Montana
6. New Hampshire
7. Nevada
8. Utah
9. Indiana
10. North Carolina
11. Missouri
12. Michigan
13. Texas
14. Tennessee
15. Idaho
The 10 lowest-ranked states:
36. Illinois
37. Ohio
38. Iowa
39. Louisiana
40. Arkansas
41. Alabama
42. Rhode Island
43. Hawaii
44. Vermont
45. Minnesota
46. Maryland
47. Connecticut
48. California
49. New York
50. New Jersey
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