There are many factors that must be incorporated into a study of just which states are the most business-friendly in this country. Among the factors involved are such diverse variables as taxes, not only individually but also on the corporate level. Some states are willing to offer bonuses and special deals for businesses in order to encourage corporations to invest in their state. Regrettably there are those, of which California continually places the worst, that so over-tax and over-legislate business that it discourages business growth.
Corporate tax rates and the level of capital gains taxes are considered as well as the availability and accessibility of business loans and banks willing to lend investment capitol for business growth. This is an especially important factor when including small business growth in the overall financial health of a state.
Population and population growth also factor into the equation. A state needs a good workforce in order to allow business growth. Not only do private sector ratings, like the annual Pollina Corporate Top 10 Pro-Business States Study and the governments own Small Business Administration Office reports demonstrate a consistent factor. States with a high growth in population are always the states that score the highest in the lists of business-friendly states. Of those states with the fastest growth, Nevada, Texas and Arizona are climbing the fastest into the top ten business-friendly states as business is taking a major trend westward.
Merely having a high population is not the defining factor. States with a high number of potential workers unemployed and creating a welfare entitlement state tend to be less than helpful for new businesses to invest in.
The effort of the political leadership in a state also plays a critical role. As an example, though California routinely falls near the bottom of business-friendly states, the efforts of their Governor Schwarzenegger in the last few years to rid the state of some of the more onerous restrictions has brought California up a bit. South Carolina has also flourished under the current leadership in the state government. In the last few years the massive factory and factory-outlet market they enjoy has brought them up from the eighth most business-friendly state in 2007 to the number one spot in 2008.
The cost of energy in a state is also a factor in determining how business-friendly a state can be. While not as critical for small businesses, the average utility rate in an area can be of major importance to the larger business ventures. The amount of government spending on a state’s infrastructure also plays a part in determining how business-friendly a state is. By showing continued concern about the state of growth and repair in its roads, bridges, public facilities and land management they demonstrate an important overall concern for the good health of not only the people of that state but the business that helps support them.
The list changes yearly and new factors are routinely looked at to see how they affect a state’s ratings. The general rule of thumb seems to be that the most effective states are the ones that show a greater concern for their citizens than the mere filling of the state’s tax coffers.