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Don’t tax it and they will come

As you’re talking to your favorite politicians over the Christmas break, stress that if you don’t over-tax and over-regulate, they will come. More importantly, they will stay and they will grow rural America.

Rural communities have long struggled with how to keep the best and brightest kids home instead of moving to the city for more opportunities. There are no easy solutions. But at the bottom of a long slope of ideas are the basic, fundamental principles upon which our great country is based.

The Federal Reserve Bank of Dallas released a report a while back that said Texas is the leading destination for companies relocating from other states. The main states that companies are leaving? California and New York.

In addition to Texas, Georgia, Florida, Virginia and Arizona round out the top five states for net jobs gained from 2000 to 2013. In addition to California and New York, the District of Columbia, Washington and Massachusetts round out the top (or bottom, depending on your perspective) five states for net job exports.

Read: External pressurers threaten next generation

Why, some may ask, does this occur? Those of you who follow politics and the trends therein have already figured it out, I suspect. The Dallas Fed, being a little less political, says this: “Anecdotal reports have long indicated that Texas is a favored destination of businesses departing California because of the high cost of doing business {in California} attributable to labor expense, taxes and regulatory burden.”

You don’t say.

The report goes into some detail about the numbers associated with job and business migration in and out of the top and bottom states. I won’t bore you with all that. If you want to delve into the minutia you can read the report yourself.

And don’t misunderstand. I don’t highlight this report to advocate for no government involvement in our personal or business lives. We need some regulations and the taxes to pay for them to keep the business environment safe from those who might be less than ethical.

But I will mention one other thing to make the point that excessively burdensome government intervention in the economy is a really bad idea. While the top states in net job gain from business relocation can claim bragging rights, that’s not the biggest contributor to job gain.

What is? Existing businesses that expand or new startup businesses that emerge from the entrepreneurial spirit.

The report suggests, therefore, that pro-growth policies that improve a state’s business climate and encourage new business formation can be more economically efficient than programs designed to lure businesses away from other states.

Read: Poll asks about importance of rural development in small towns

This concept is particularly important to rural communities. And that’s not to suggest that economic development isn’t important for rural communities. It absolutely is.

But as you’re talking to your favorite politicians over the Christmas break, or even your not-so-favorite politicians, make it a point to stress this information. If you don’t over-tax and over-regulate, they will come. More importantly, they will stay and they will grow.

That’s the kind of economic development that’s good for everybody.

 

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