For several years now, Texas has been at the forefront of business growth in the United States. There are several factors that have contributed to Texas becoming this beacon of economic growth in the country for many countries, and this article will cover just that.
One of the main reasons that led to the state’s recent economic boom was its pre-existing economy.
If it weren’t for the strong framework of businesses that existed prior to the wave of new companies moving to Texas, the state would not have been able to handle so much growth. This bank is a great example of a business that has been established in Texas for over a century.
This article covers three of the main reasons Texas has been so popular among companies deciding to move their headquarters to another location.
- Economic Growth
A contributing factor to Texas taking in many businesses from all over the country is its economic growth. According to worldpopulationreview’s state rankings of gdp growth, Texas ranked 5th in 2022 with a GDP growth of 3.4%. For context, New York ranked 7th at 3.2%, and California ranked 42nd at 0.4%.
States’ GDP growth varies from year to year of course, as California had a growth rate of 7.8% in 2021 and Texas 5.6% in 2021. Texas was also hit harder during the beginning of the covid-19 pandemic in 2020, as they had an economic growth rate of -3.5% while California was able to drop only 2.8%.
- Cost of Living
This ties in with the workforce, as many companies are struggling to recruit a workforce in areas with an extremely high cost of living. Areas with low cost of living typically don’t have a strong workforce pool to recruit from, however Texas is one of a few exceptions to that rule. With many universities scattered across the state as well as numerous large metropolitan areas, it makes it much easier for companies to recruit top talent than in places like New York or California.
According to worldpopulationreview, Texas has the 17th lowest cost of living in the United States. While it may not be in the top 5 or top 10 cheapest states to live in, very few if any have a workforce that can compete with that of Texas.
- Favorable Tax Policies
One of the most attractive elements of moving to Texas as a business would be their 0% income tax rate. Both companies and individuals do not have to pay a tax on their income to the state.
Additionally, Texas has relatively low corporate taxes compared to other states, and has a great deal of other incentives to keep companies to base their headquarters in the state.
You should now have a better understanding as to why so many companies are moving to Texas. If you’d like to find out more information about this topic, we recommend checking out this opinion piece from the New York Times.