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Economic Diversification: What Do Companies Want?

For anyone with any practical experience in the private sector, listing the sorts of things companies look for in order to open or move a business to Nevada is pretty simple….and obvious.

But those who want to raise taxes to spend on all manner of government-run programs and services continue to claim companies aren’t looking at taxes so much, but want a whole panoply of other “stuff” – including government-run schools, museums, performing arts centers, parks and recreation.

Well, a recent story by Las Vegas Review-Journal business reporter Jennifer Robison should put the matter to rest….except the forces of bigger government never rest and never quit.

First, we keep hearing from the left that companies look at Nevada’s failure to provide Cadillac-style government programs and services as the reason more companies don’t want to relocate or open operations here. But “a recent survey by Chief Executive magazine handed Nevada the No. 5 position among the best states for business, thanks in part to the Silver State’s tax and regulation regime.”

A similar study last year by Area Development, a “diversification-industry magazine,” listed a state’s corporate tax rate as #5 on their list of considerations when considering a move, trailing “labor costs, highway accessibility and power expenses.” Schools, culture and parks didn’t even make it in the top ten.

Ditto for another survey by Site Selection magazine, which lists state and local taxes as the #3 factor in relocations decisions. And once again, schools, culture and parks didn’t make it into the top ten.

In addition, Robison’s report included “a sampling of businesses that moved to Southern Nevada in recent years, and what they said about why they decamped in the Silver State.” And lo and behold, not one of the seven interviewed even mentioned schools, culture and parks as a factor, let alone as a deciding factor, on their move.

In fact, in the entire story the only person to claim that businesses “care as much about world-class museums, quality performing arts and recreational opportunities as they do about taxes” was some guy named Jack Kyser who founded the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp.

Any bets on whether or not this guy gets government grant money?

Anyway, here’s a very brief summary of what the seven companies who moved to Nevada in recent years had to say about their reasons for moving here:

Zappos.com: “lower taxes, more affordable workers compensation insurance and easier commutes”

Mobile Productivity: “McCarran (airport’s) schedule of frequent, affordable flights”

Metl-Span: “Nevada’s highway and rail infrastructure”

Murray Feiss Import: “The two biggest things for us were low outbound freight costs and the definite tax advantages over California.”

Pediped Footwear/American Grating: “The companies saved on workers compensation and health insurance, and McCarran International Airport has abundant service to the destinations the (owners) visit on business.”

Non-Invasive Medical Technologies: “Across the continuum, Nevada simply outranked the other state with its tax advantages and the worker pool.”

Cord Blood America: “Easy airport access, shipping logistics and tax abatements”

Again, not one listed schools, museums or parks as motivating factors in moving here. Not one. If those sorts of things were on their list at all, they sure weren’t at the top. And here’s why this is important…..

Funding schools, museums, parks and other government services takes money. To get that money, taxes would have to be raised. On businesses. But as we see and know, businesses, given the option, would prefer a better tax climate than cultural amenities. So to raise taxes on businesses in order to build more schools, museums and parks to attract more businesses here will produce the opposite of the desired effect.

To paraphrase a well-known phrase: It’s the taxes, stupid. Not the schools. Not the museums. Not the parks. Taxes. Jack them up, and businesses will find greener pastures. It’s just that simple. And it’s just common sense. Which is why the left is on the wrong side of the issue.