PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

STATE SPOTLIGHT: High Growth Texas

By at 14 January, 2020, 9:01 am

by Raymond J. Keating-

The U.S. Bureau of Economic Analysis released its estimate of third quarter real state GDP growth on January 10. The economy grew in 49 of 50 states.

The top state for growth was Texas, with its real rate of increase in GDP registering 4.0 percent. That far outdistanced the second highest growth rate, which registered 3.2 percent in Utah.

In fact, looking at the last seven quarters of data in this report, the Texas economy has been on a high-growth streak.

Quarter

   Texas Real GDP Growth

2018    Q1
          3.9%
2018    Q2
          5.0%
2018    Q3
          4.0%
2018    Q4
          3.9%
2019    Q1
          5.3%
2019    Q2
          4.7%
2019    Q3
          4.0%

 

Over this period, Texas real GDP grew at an average rate of 4.4 percent. That was far ahead of the average U.S. rate of 2.5 percent. Indeed, the Texas average growth rate was 76 percent faster than the nation as a whole.

What’s the secret sauce for growth in Texas?

Well, its’ no secret. Instead, it’s clearly illustrated in SBE Council’s “Small Business Policy Index 2019: Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth,” which ranked the 50 states according to 62 different policy measures, including assorted tax, regulatory and government spending measures. Texas ranked best on the Index.

Texas has many positives working in its favor, such as low unemployment taxes; low gas and diesel taxes; tying for the lowest energy regulation burden; fairly low workers’ compensation costs; imposing no annual fee on LLCs; relatively low state and local government spending; being a right-to-work state; imposing light land-use and zoning regulations; and inflicting no added minimum wage mandate.

But most critically, Texas imposes no personal, individual capital gains, corporate income, corporate capital gains and death taxes.

Texas stands out as a state that provides a sound policy foundation for growth, entrepreneurship and small business success. And yes, economic growth in turn flourishes – indeed, like nowhere else in the nation of late.

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

 

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