Low taxes, wages bring business to Texas

Andrew Messamore

Texas was rated the best climate for business in the U.S., according to a survey of 322 corporate executives by the New York-based marketing company Development Counsellors International, where it was indicated that half of the responding executives were planning on expanding or consolidating offices or facilities in Texas.

These companies want to come to Texas to enjoy its low taxes, low wages and little business regulation, said former UT professor and current Ohio State business professor Michael W. Brandl.

“Corporations that relocate to Texas can instantly be more profitable and pay non-executives less,” Brindl said. “The executives will also personally benefit from a move to Texas since Texas has no state income tax.”

However, the climate may not be entirely friendly to all forms of business, Brandl said. The statistics represented in the survey may represent the top end of business and not the employees, he said.

“[The survey] means that while Texas has attracted a lot of corporations to relocate into Texas, it’s not all good news for nonexecutives,” Brandl said. “I think it is true that Texas leads the nation in the percentage of workers that earn the minimum wage. This is good for business (low labor costs mean higher profits) but what does it really mean for the Texas non-executive workers?”

Austin in particular has aided the growth of small business through the use of its Small Business Development Program. The 15-member program staff, which is one of only a handful of entirely city-funded business programs in the country, has partnered with UT through a contract to offer classes and documentation for loans to small businesses, which often fare better than larger businesses in times of recession, said Blake Smith, financial analyst for SBDP.

“I’m sure we’re making a significant change in the business climate. In the past year we’ve worked with 354 customers for one-on-one coaching [for small business owners],” Smith said. “Our role is an information portal — [we answer] how do I do it, and where do I go.”

Local business owners Michael Heyne and Dominik Stein of Verts Kebap started their restaurant on the Drag to appeal to the active fast food culture and small business climate. It is a very employer-friendly city, with plenty of opportunities for employers to get to know the people they work with, Heyne said.

When asked if they came to Texas because of its laws, the answer from Heyne was a firm “no.”

“We could have gone to other states. We had the option to go to New Orleans. But in Austin there’s just a really active food culture,” he said. “We came here just because we wanted to make tasty food where you didn’t feel like you couldn’t eat for a month.”