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October 7, 2022

Texas, Florida best states for business; California worst

Texas and Florida are the best states for business again, according to this year’s annual ranking published by Chief Executive Magazine. California remains the worst.

In its “Best & Worst States for Business Survey of CEOs,” the magazine published the findings of its annual survey of nearly 700 CEOs, company presidents, and business owners in every state.

Texas has ranked first every year since 2001, when the magazine first began ranking states’ business environments. Texas ranks first largely because it has no corporate income tax, has a fast-growth population, low regulatory business climate, and diverse, skilled workforce.

Florida ranked second, with Tennessee, Arizona and North Carolina rounding out the top five.

The bottom states have consistently remained there, especially the bottom five, according to the survey. The worst states for business, according to the survey, are California, New York, Illinois, New Jersey and Washington.

High taxes, greater regulatory burdens, and high costs of living are cited as significant factors contributing to keeping bottom-ranked states at the bottom.

“Despite some of the nation’s top talent pools and education systems, it will take a true revolution in their tax and regulatory structures to gain ground with CEOs – and move up from the basement,” the report states.

When it comes to Texas, the magazine said, “Texas has enjoyed an era of stunning growth based on a broadening of its economy to automobile production, digital-technology development and shared services as well as the traditional base in oil, gas and refining.”

“Texas is the beacon of freedom and opportunity thanks to our competitive business environment, no corporate or personal income taxes, limited regulations, and endless opportunity that allows all Texans to prosper,” Gov. Greg Abbott said in a statement announcing Texas’ top ranking.

Florida also has consistently been at the top of Chief Executive’s ranking, the magazine notes.

Florida’s high ranking is due to the “consistently business-friendly approach under Governor Ron DeSantis that crested during the past couple of years with his hands-off approach to Covid shutdowns,” the magazine said. “While Gov. Ron DeSantis’ bold moves in the past year often went against CDC guidelines and the national consensus, there’s a strong case that it has helped the state’s economy weather the storm.”

It also points to several companies that have relocated to Florida and its top corporate income tax rate of 4.5%.

Despite Texas holding the top spot, Florida outranks Texas in many categories cited.

Florida ranks 4th in the Tax Foundation’s State Business Tax Climate Index, the report notes; Texas ranks 11th. When it comes to quality of life, the magazine ranks Florida 10th and Texas 31st.

When it comes to unemployment, Texas’ seasonally adjusted unemployment rate in March of 4.4% was higher than the nation’s 3.6% and Florida’s 3.2%.

While Texas and Florida consistently rank at the top and California at the bottom, the report highlighted a silver lining for the Golden State.

“While it’s hard to overlook the growing number of companies moving their headquarters from California to other states, the Golden State remains an economic powerhouse with the 5th-largest gross domestic product in the world,” it said.

“CEOs often lambast California’s business climate and regulations, yet they don’t hesitate to set up shop and access the country’s top talent market. While Tesla, Oracle, Palantir and Hewlett-Packard Enterprise have made announcements to leave the state in the past year, companies like Google, Apple, L’Oréal and Takeda Pharmaceuticals are doubling down.”

The greatest number of businesses leaving California are moving to Texas, a Stanford University study found last year, leaving behind California’s 8.8% corporate tax rate.

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