The Last Word
Great Business Climate Is More Than Low Taxes
Economic development is highly competitive. States and communities all across the country compete aggressively to attract businesses and jobs. An excellent business climate is a big factor in business expansion and recruitment.
Every metropolitan area in Utah, Idaho and Wyoming wants to be a place where businesses thrive, excellent jobs are created, and individuals and families enjoy a great quality of life.
When we consider what makes an attractive business climate, we often think of low taxes and reasonable regulation. Clearly, both are vitally important. But other factors are also necessary, and in many cases just as important as taxes and regulation.
For example, the biggest challenge facing most businesses today is the lack of a qualified workforce. That issue almost always comes up No. 1 in surveys of business leaders naming the biggest impediment to expanding their enterprise. Businesses want to expand or relocate in a vibrant locality where they can find great employees.
A great workforce requires an excellent education system, including K-12, technical education and higher education. Businesses seek locations where their children can attend good schools and where the education system produces employees prepared to work. States and localities that neglect education struggle to attract businesses, even if taxes are low. Education can’t be done on the cheap. It requires an investment of tax dollars, especially for young people from low-income families.
Another key factor of a good business climate is excellent mobility so commerce flows freely, commuters can get to work, and families travel easily to desired locations. Traffic congestion and gridlock are economy killers. Good public transportation, walking and biking trails, and land-use planning that discourages sprawl are becoming more and more important to achieving an excellent business climate. Good infrastructure requires a consistent flow of tax dollars from all levels of government.
Other factors include clean air, recreational opportunities, access to the natural world, arts and cultural activities and other things that provide an enviable quality of life.
Many of these elements that attract businesses require an investment of tax dollars. Private enterprise and public-private partnerships can certainly help create an excellent business climate, but sufficient public funding is usually critical to overall success.
So, a good balance between taxes and government services is key. Policymakers and business leaders must find the sweet spot between low taxes and sufficient revenues to produce a climate where businesses can thrive and good jobs are abundant.
That’s why business leaders are often the ones who lead the charge on educational excellence, arts and cultural opportunities, and good transportation infrastructure — even while understanding that these things require sufficient tax dollars. In my experience, businesses are willing to pay a fair share of taxes if government is well run and tax dollars are spent wisely on education, infrastructure and the other elements of a healthy business climate.
Businesses obviously appreciate a low tax burden. But ideally, sufficient taxes are carefully and smartly used to produce excellent education and the other elements of a great business climate.