Another Triumph for Texas: Best/Worst States for Business 2012

The following is a representative sample of comments from participating CEOs:

• California is the worst! They are doing everything possible to drive a business out of their state. If it were not for the climate, they would have lost half their population.
• California regulations, taxes and costs will leave only tech, life sciences and entertainment as viable. If you aren’t an elitist, no room here for the middle or working classes.
• California treats business owners like criminals. California has different overtime policies for its own employees vs. private sector.
• California’s labor regulation is a job killer. We will be moving our business out of the state, which will lose hundreds of jobs simply due to the poor regulatory environment.
• California should secede from the union—it is like doing business in a foreign country, it has its own exchange rate, and its regulation is crazy.

Although Gov. Jerry Brown deserves credit for some spending cuts, his proposed budget promises more out-of-control spending financed with higher personal income taxes. It’s little wonder that most Silicon Valley CEOs say they won’t expand in California because of high taxes and burdensome regulation. Intel long ago moved its plants to Nevada, and Cisco, Google and others have located their server farms to places like Utah, Arizona and Oregon. California still ranks first in technology, agriculture and entertainment, but even this advantage in time can be undermined.

Once near the bottom of the Best and Worst rankings, New Jersey has made some progress in the eyes of business leaders, but it still has a long way to go. It has moved up to 45th from 47th owing in no small measure to Gov. Chris Christie’s attempt to reverse what he calls a “failed experiment” in raising taxes and increasing regulation. Some CEOs applaud his move to phase in tax cuts, but many complain that its regulatory and permitting bureaucracy remains burdensome. Similarly, New York is given credit for moving in the right direction, but most warn that there is much room for improvement. Gov. Andrew Cuomo’s much-touted state pension reform, for example, is far less daring than advertised, leaving the governor to bump up the top income tax rate to 8.82 percent. In New York City, citizens face a staggering 12.7 percent rate.

It’s clear that most states recognize they have an opportunity to compete by adjusting their tax and regulatory regimes, but above all what attracts business leaders’ attention is a cooperative attitude and a willingness to work with the private sector. “A good state is one that actively encourages competitive business, demands low relative taxes and has a highly educated workforce,” commented a CEO respondent. “After all, we’re the ones who create the jobs.”

See the full grades for each state