Best States for Business in 2018? Texas, Florida, the Carolinas & Indiana

“Their business-friendly climate, state incentives, and geographical location were important factors…”

Texas Insider Report: WASHINGTON, D.C. — Ever since then-Governor Rick Perry began aggressively recruiting businesses to Texas with his newly created Texas Incentive Funds, Texas has held the No. 1 spot on Chief Executive’s “Best & Worst States” Survey.  And now, for the 14th year in a row, Texas is once again the best place to do business in the United States according to Chief Executive’s “Best & Worst States for Business 2018”.

Nipping at Texas’ heels are No. 2 Florida, in a tie, No. 3 North Carolina and South Carolina, followed by No. 5 Indiana, said the CEO’s ranking.

In today’s highly competitive business environment, the Texas Enterprise Fund (TEF) is the largest “deal-closing” fund of its kind in the country. And its now being used by Perry’s successor, Gov. Greg Abbott, as a final incentive tool to differentiate Texas in the battle to secure major business growth projects that offer significant job creation, and capital investment.

The worst places? No. 50 is California, bested only slightly by No. 49 New York, No. 48 Illinois, No. 47 New Jersey, No. 46 Connecticut and No. 45 Massachusetts.

If these rankings sound familiar, that’s because they are the exact same positions each of these states has occupied in each of the last four years in the annual poll of CEO’s.

“Generally those performing best and worst stay there because the states don’t see significant leadership changes. They have a philosophy about how to approach the business climate and economic development,” says Larry Gigerich, managing director of Ginovus, an economic development consultancy in Fishers, Indiana.

Meanwhile, there are fast and furious moves up and down by states in the middle.

Rhode Island rocketed up 10 spots to No. 32 this year, while Michigan gained 9 spots, up to No. 27. Nebraska fell six to No. 26, and Idaho plummeted by 10 to No. 28.

What explains the dynamism in the CEO’s opinion of states in the middle, while their impressions dictate complete stasis in the rankings at the top and bottom? Both realities and perceptions, say CEOs, State & Local Officials, as wall as economic development consultants.

The top states recognize how truly important it is to maintain the business-friendly cultures — and to have the incentives to move there — that helped them grow dynamically.

“Their business-friendly climate, state incentives and geographical location were important factors in our final decision,” said Masato Yoshikawa, President & CEO of Kubota Tractor, of the company’s recent decision to to make a major relocation move from California to Texas. 

“The fact that Indiana is generally a state ‘open for business’ is kind of accepted,” says Parker Beauchamp, CEO of INGUARD, an insurance and risk management firm of about 50 people headquartered in Wabash, Indiana. “It’s been good enough for long enough that people just kind of know there’s no shenanigans, no running hot and cold. It’s a very solid, all-around state.”

Texas has no corporate or personal state tax,” said Bill Hall, CEO of Ultravision International, a Dallas-based LED lighting manufacturer. “And Texas gives us very highly skilled workers because of the number of great colleges we have.”

But Avis-like, Florida and the Carolinas keep trying to knock Texas off the pinnacle.

Florida “is a very good place to do business, with relatively low regulations and relatively low cost of labor, a good university system and low cost of living with no income taxes,” says Jeff Vinik, the most prominent real estate investor in the Tampa Bay area.

And, “North Carolina has it right — it has a nice environment and climate and is business friendly, and while it doesn’t have a zero tax rate, property taxes are reasonable and so is the cost of living.” says CEO of Grant Thornton Michael McGuire, adding, “Plus Charlotte and the Research Triangle are there.”

Meanwhile, the high-tax, high-cost environments created by the bottom states also tend to be self-reinforcing. Mostly, those places are kept afloat economically by legacy advantages such as strong education and healthcare systems, as well as by the fact that in-demand, digitally skilled millennials enjoy living in their cities.

The situations of bottom feeders could get worse before they get better, in part because of a particular effect of federal tax reform on high-tax states — like the basement dwellers.

“The exit numbers of companies and owners are going to be higher,” McGuire says, “because people won’t be able to deduct as much in property and income taxes. They’re being taxed into oblivion.”

Also, the coasts are losing some of their perceived edge in talent and lifestyle amid sharply higher costs of living — and facing steadily increasing digital capabilities in the heartland.

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Source: Texas Politics

Best States for Business in 2018? Texas, Florida, the Carolinas & Indiana

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