The Best/Worst States for Business: Where Do You Live?


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best-worst-stateCEO Magazine just released their annual survey results. Some 600 company executives were surveyed and asked to rank states based on several things, including taxes/regulation, workforce quality and cost of living/living environment.

In order, the top 5 states were Texas, North Carolina, Tennessee, Virginia and Nevada. The bottom 5 states, again in order, were Massachusetts, New Jersey, Michigan, New York and California.

Some states saw big drops. Oregon, for example, fell from 24th place to 38th place overall. Connecticut and North Dakota each fell 7 spots to wind up at 24th and 45th respectively. Others saw gains, including Utah (up 6 places to 9th overall) and Washington (moved from 40th to 30th). In Washington’s case, I wonder if the new budget introduced after the survey was completed may have changed anything. It’s also easy to wonder if Oregon’s massive tax hikes (some made retroactive to 2009) had something to do with its 14 place drop.
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Taxation and regulation featured heavily in the results. On a scale of 0 to 4 (with 4 being the best), the perceived attitude of government towards business ranked at 0.75 in California compared to 3.75 in Texas. One executive commented that if he could grow crops in Reno he’d be gone the next day. Another called CA the most adversarial state in the nation, advising that they’d left money on the table rather than deal with state government officials. Tax rates followed suit, with California ranking at about 0.5 compared to 3.75 in Texas.

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I thought it was interesting that while Texas has a gross profits tax (called the Texas margin tax), it still ranked as the most business-friendly and best place to do business in the country. I also thought it was interesting that the most important thing to the CEOs surveyed wasn’t taxation, regulation or lifestyle, but instead was employee work ethic. #1 Texas ranked higher than #50 California, but the margin was nowhere near as wide as in other categories.

Of course surveys can be interpreted to show just about any result you want. But it’s hard to ignore some of the findings. California lost 1.5 million people from 2000 to 2009. New York lost over 1.6 million people. Texas gained almost 900,000 new residents. It probably wasn’t the weather, at least in the case of California.

The cheerleader in me wants to send copies of this survey to every member of the Nevada legislature, and tell them to keep these numbers in mind next year, when our government next meets. #5 out of 50 is a very good spot, particularly when I think about how the real estate collapse has devastated our housing market. But the business owner in me is looking at these numbers carefully, too. If quality employees are voting with their feet, it stands to reason that a company in need of a workforce will go where the good people are, especially if government regulators are welcoming them with open arms. Besides, I like Texas.

(To read the full article, click here).



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