Sometimes the key to business success is location. That, of course, is not to say that other factors do not play a roll, but doing business in a place that supports and encourages business through incentives, tax policy and the like always conveys an advantage over those who have to do business in places that don’t offer such support. In a recent article, US News and World Report put together a list of the seven best states to start a business.
US News Seven Best Places to Open a Business
Taking data from the New State Economy Index by the Kauffman Foundation and combining it with the 2008 Small Business Survival Index of the Small Business and Entrepreneurs Council and combining that data, here is what they came up with:
Florida. A good tax climate with low corporate and unemployment taxes and no individual income taxes attracts business even though the state was hard hit by the mortgage crisis. On top of these, Governor Crist has proposed a small business stimulus package that will provide 5-year loans at 2% interest to companies with 10 to 99 employees with an eye toward helping them through the hard times.
Note:US News put Florida at the bottom of their list, but with this small business stimulus proposal, I think it deserves the top spot.
WashingtonState. On the policy side, low taxes is a hallmark of the EvergreenState, especially since it has no personal or corporate income or capital gains taxes. What it does offer is a high-wage, manufacturing and technological economy that is a leader in both alternative energy use and energy efficiency.
Virginia. In the OldDominionState, a highly educated workforce with a lot of technical skills mixes with low taxes (including some of the lowest consumption taxes in the nation) to produce a strong environment for entrepreneurs.
Colorado.Colorado’s population is growing by leaps and bounds as highly educated people from other parts of the nation and head to the Rockies. With the third-most educated workforce, Colorado is in fourth place for the number of patents issued per 1000 workers. Throw in the state’s reasonably light tax burden—Colorado is in the top half of the states for income, capital gains, consumption and property taxes—and it is easy to see why Colorado is a good place to set-up shop.
Texas. The LoneStarState has a very low tax burden (no income or capital gains taxes) as well as very low cost of employment through having the lowest-cost workers compensation program of any state. More than that, if you have your eye on a global market, than Texas, with the highest per-worker export sales ($69,268.00) and a manufacturing sector geared to exports, could well be the best place for you.
Nevada. The home of Las Vegas is all about opportunity, there is no question about that. This is a state that values entrepreneurship and prosperity with zero income or capital gains taxes on either individuals or corporations, very low property taxes and a very low number of government employees. Yet, with all that, Nevada ranks high in terms of manufacturing, the sophistication of its healthcare infrastructure and the number of patents per 1000 workers.
Utah. With few healthcare mandates, Utah lowers the cost of employment. What’s more, the state boasts a high number of start-ups—the third fastest business growth in the nation, as well as the third highest start-up to failure ratio, which indicates a robust and evolving business scene where old and inefficient businesses die off under the competition of newer, more efficient businesses. It is positively Darwinian.
The Bottom Line
What do all these states have in common? Good tax climates for individuals and business. These states understand that prosperity is not a societal thing, it is an individual thing, and that the more people who are prosperous, the more prosperous society as a whole will be. They understand that taxes merely siphon money away from the productive areas of the economy and they understand that this only inhibits growth and prosperity. This is not an issue of ideology, it is math, plain and simple; and it would be nice if other states and the Federal Government realized that.