PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Election 2018: Results of Key Governor Races

By at 7 November, 2018, 9:51 pm

Small Business Insider

by Raymond J. Keating-

State policymaking affects entrepreneurs, small businesses, investors and workers. SBE Council’s Small Business Policy Index 2018 and Small Business Tax Index 2017, which rank the states on their policy and tax climates for small business, showcases that effect.

There were 36 races for governor on November 6, and the results of these races will ultimately affect the small businesses and economies of these states.  Here are a few quick points worth noting in some key races:

Florida: Andrew Gillum (D) lost in a close race to Ron DeSantis (R). One of the key takeaways from this race is what was avoided. As noted in a recent SBE Council analysis, Gillum had called for a 41 percent hike the state’s corporate income tax rate – from 5.5 percent to 7.75 percent. Such a tax increase would have been a heavy blow inflicted upon businesses in the state and to Florida’s favorable climate for small business. DeSantis, on the other hand, emphasized tax and regulatory relief, and therefore would improve Florida’s already competitive business climate if such reforms are enacted.

Nevada:  Stephen Sisolak (D) defeated Adam Laxalt (R) in the state that currently ranks #1 for small business policy friendliness on SBE Council’s Small Business Policy Index 2018.  In our pre-election analysis, it was noted that Laxalt proposed to reduce taxes while Sisolak mentioned no such thing. Sisolak’s agenda focused on “job-creating” projects, like stadiums and convention centers, which can cost taxpayers a bundle but actually do little to drive economic growth. Highly competitive states cannot get complacent on policy matters and hope to ride out their pro-business reputations. There are always other states working on continuous policy improvements with the aim of becoming more attractive to business and investment. The best states work on getting better, but it could be that Nevada takes a break on pro-growth policy improvements.

Georgia: Stacey Abrams (D) lost to Brian Kemp (R), but she has yet to concede the race (as of the time of this posting.) Similar to Florida, this outcome is notable for what was avoided. As SBE Council noted recently, Abrams had pledged to repeal recent tax cut legislation – featuring reductions on the state personal and corporate income tax rates –  but then reversed course, saying that she would let the legislation stand. Meanwhile, Kemp had been clear that he was looking to further reduce tax rates, which will improve Georgia’s competitiveness and help the state’s small businesses.

Ohio: State Attorney General Mike DeWine (R) won the race for governor, and his policy agenda featured pro-growth regulatory proposals. Carrying through with substantive deregulation would be a huge plus for Ohio, and further improve upon the state’s solid policy climate for entrepreneurs and small businesses.

Connecticut: It was a very close race in the Nutmeg State, with voters rejecting a candidate, Bob Stefanowski (R), who proposed a bold pro-entrepreneur, pro-growth agenda (see SBE Council’s analysis). Considering how costly the Connecticut policy climate is – ranking a poor 43rd on the Small Business Policy Index 2018 and 41st on the Small Business Tax Index 2017 – this appears to be a missed opportunity, and unfortunately it appears that the state will remain costly and burdensome for its small businesses.

Michigan: Gretchen Whitmer (D) defeated Bill Schuette (R). While Schuette called for reducing the state’s individual income tax rate from 4.25 percent to 3.9 percent, Whitmer offered no changes in the tax rate. This appears to be another missed opportunity, especially for the state’s entrepreneurs and small businesses.

Let’s hope that going forward from Election Day, the winners in governor and state legislative races across all of the states realize that reducing tax and regulatory burdens on entrepreneurs and businesses would be beneficial to workers and the economy. After all, there is fierce competition for investment and business relocation, and states offering the most hospitable policy climates will reap the rewards of higher economic growth, quality job growth and stronger small businesses.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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