Texas must work to keep its edge

Published on Monday, 5 May 2014 21:49 - Written by

We always should remember that when a company leaves another state to take advantage of Texas’ more friendly business climate, there’s a loser, as well as a winner. And as two recent relocation announcements demonstrate, California is losing a great deal these days.

We can’t blame the Los Angeles Times trying to reassure its readers that it’s not really California’s fault that Toyota is relocating 5,000 jobs to Texas, and that Occidental Petroleum is leaving, too.

That L.A. Times editorial makes some excuses, but it also makes some valid points. Texas is more attractive — for now.

“The numbers don’t lie: California still exerts a powerful magnetic force on some types of employers,” the editorial states. “All the same, the state’s economy has changed dramatically since the days when Toyota and Occidental first set up shop. And lawmakers have to stop acting as if businesses have nowhere else to go.”

The editorial blames the recent losses on California’s past successes.

“Its enormous population strains its infrastructure and safety-net programs, demanding ever-larger investments in roads, water, schools and healthcare,” the editorial states. “Its topography traps smog, requiring costlier efforts to clean emissions. The results are a cost of living and a cost of doing business that are among the highest in the country.”

All of those things are true.

But Texas has experienced its own growing pains, and we’re struggling with infrastructure needs of our own — mostly highways and water.

Yet we don’t have the kind of heavy taxation and heavier regulation that businesses face in California.

The editorial also implies that Texas and other states cheat by offering tax breaks to companies looking to relocate.

Well, what’s wrong with that? Tax abatement is a tool we can use to lure good jobs to the state. Yes, we get a little less tax money from a newly relocated business — for the first few years. After that, it’s paying just like everyone else. The alternative to tax breaks isn’t everyone paying their “fair share.” The alternative is no tax money at all — because the business won’t come here.

The Times editorial has some advice for California lawmakers.

“As they (lawmakers) work to preserve the environment and protect the vulnerable, they need to pay more attention to the costs that make California less attractive to business,” the editorial states. “Because California’s rivals don’t need any more help convincing companies that the grass is greener on the other side of the state line.”

You know who else needs to heed that advice? Texas lawmakers. Because there’s an infinite number of ways to blow our lead, and lots of other states that will compete for business relocations.

Let’s start with taxes. Texas’ margins tax (our version of a corporate income tax) is cumbersome and inelegant. The Legislature should work toward real reform in the upcoming session.

Likewise, transportation funding is in sore need of reform. The gas tax just isn’t keeping up.

Texas leads the nation in attracting new businesses. But let’s not get complacent.