State Job Poaching Intensifies; Will the South Rise Again?

Republican Gov. Rick Perry has been on a high-profile national tour this year in an effort to convince companies from other states to relocate to the more business-friendly climes of deep-red Texas. So far Perry has fallen flat as the $2 million campaign has not brought any new jobs to Texas.

Perry targeted mostly blue states, and political leaders in California, Connecticut, New York, Maryland, Illinois and Missouri are not pleased with his tactics. Texas, the one-time presidential candidate boasts, offers a much friendlier economic climate that will allow businesses to flourish in ways they cannot in northern, blue-tinged states. He argues taxes are lower and regulation more business-friendly in the Lone Star state. Texas has neither a personal income tax nor a corporate income tax.

Meanwhile in the Midwest, Democratic Gov. Jay Nixon of Missouri has called for a truce to an escalating cross-border policy war with Kansas, where Republican Gov. Sam Brownback has been aggressively pursuing policies that would draw jobs away from the Show Me State to his own. So far these policies appear to have been successful, as there has been a net influx of jobs to Kansas from Missouri.

Nixon’s opposition to these “job-moving,” as opposed to job-creating, policies is apparent – he’s stated, “[It’s] bad for taxpayers. It’s bad for our state budget, and it’s not good for our economy.” Earlier this year Nixon vetoed a comprehensive tax relief bill passed by the Republican-controlled legislature, bashing the bill in a veto letter as ill-conceived and fiscally irresponsible, insisting that Missouri is already a low-tax state and that the bill would harm important public services.  The bill would have, among other provisions, decreased the state’s corporate and individual income tax rates.

While the high-profile public narrative has been focused on these pointed disputes between state leaders, the policy coming out of state legislatures during the 2013 session reveals that many states are moving to close the tax gap with states Texas. The National Conference of State Legislatures reports that states will collect a combined $1.9 billion less in personal income taxes as a result of tax reforms made and enacted during 2013, while corporate income taxes will increase by about $100 million. Iowa, Maine, Ohio, North Dakota and Wisconsin will all log lower personal rates this year, and North Carolina has reduced both the corporate and personal rate. Earlier in the year, Louisiana Republican Gov. Bobby Jindal tried to sell a plan to replace the state’s income tax with an expansion of the sales tax. Colorado voters recently rejected a proposal, Proposition 66, which would have increased the personal income tax to fund education.

During the 2014 legislative sessions states are likely to continue the seemingly never-ending examination and revision of tax policy while Perry,Bloomberg has reported, will continue his national tour promoting Texas as the ideal place to do business. According to State Republican Party Chairman Steve Munisteri, “You’ve got to understand the Texas swagger.”