There is ongoing speculation about how cities can attract economic development, particularly the large-scale kind spurred by corporate relocations. The question is particularly important to public officials, who view such growth as a way to get instant jobs and tax revenue. The answer may lie in the example of Dallas, a metro areas that has been among the nation’s economic growth leader. The causes for success are multi-faceted, but mostly boils down to their open economy.
According to Site Selection magazine, Houston and Dallas were second and third, respectively, among the nation’s 10 largest metro areas in economic development in 2015. Texas was the leading state for economic development, and the two metros accounted for 70% of this. The calculation was based on the number of new corporate facility projects that contributed at least $1 million in capital investment, 20 new jobs or 20,000 square feet of floor space. The recent growth has bolstered two metros that already have among the strongest corporate presences in America, and a state that has become famous for poaching companies and people from California, Illinois and New York. Much of it can be attributed to their good business climates at both state and local levels.
This begins with taxes. Texas is one of seven states that currently have no income tax, and has the fifth-lowest overall state tax burden, according to Forbes data. Texas and its various localities have light regulations regarding land use, labor rules, business permitting and compliance costs. Together, these two factors—light taxes and regulations—explain why Dallas, for example, was named America’s best business climate by MarketWatch.com, and why Texas routinely ranks near the top in economic freedom, recently improving its score even as economic freedom declines nationwide.