The real danger to our state’s economic dominance isn’t just competition — it’s complacency. As other states realize the need to copy the Texas model, we Texans are in danger of taking our relatively booming economy for granted, and letting our lead fade.
A number of trends are at work here. First is the effort on the part of other states to do what Texas is doing right — working to encourage a business-friendly environment.
Last year, California Gov. Jerry Brown made a bold step in the right direction.
“Gov. Jerry Brown approved a package of 18 business-friendly bills, including legislation heavily lobbied by Silicon Valley entrepreneurs and aimed at boosting sales of high-tech goods and services,” the Los Angeles Times reported in October.
The state is taking the loss of Toyota to Texas seriously, and Brown is expected to announce soon even more measures to help that state retain and even attract new businesses.
Meanwhile, New York is continuing its “The New New York” campaign, which touts the state’s “new” approach to business.
“Some said we lost our edge,” actor Robert De Niro says in one ad. “Well today, there’s a new New York State, one that’s working to attract businesses and create jobs.”
The campaign includes “Startup NY,” a program to help people who want to start a new business.
“Now, businesses can operate 100 percent tax-free for 10 years,” the state says. “No income tax, business, corporate, state or local taxes, sales and property taxes, or franchise fees.”
Truthfully, neither California nor New York have yet replicated the conditions that have drawn so many businesses and residents to Texas in the last decade.
But those states have at least now shown they know what works.
The challenge for Texas won’t just be competition from those states. It will also be complacency at home.
Take the state’s flawed franchise tax. Sure, there’s talk of tax cuts. State Sen. Dan Patrick, a Republican who appears a shoo-in for lieutenant governor, is leading that charge.
But Texas needs more than tax relief — it needs tax reform. The franchise tax is poorly designed and is acting as a drag on our state’s economy. It was adopted in 2006 in an effort to cut property taxes — the hope was to give some relief to homeowners. But few homeowners actually saw the full one-third property tax cut they were promised, and the franchise tax proved to be disappointing. It’s complicated and unpopular.
When asked on the March primary ballot if the tax should be abolished, an amazing 90 percent of GOP voters said yes.
Of course, abolishing the tax altogether would mean lawmakers would have to find the money elsewhere. A better approach, at this point, is to reform the tax.
Texas lawmakers will also be forced to balance tax reform with infrastructure needs. Gas tax revenues have lagged while transportation and water needs have risen.
We Texans love to compare our state with others. It’s going to take political courage for us to keep those bragging rights.