Florida Gov. Rick Scott the other day wrote letters to business leaders in Illinois and California, urging them to get a “one-way ticket” to Florida.
It was a nifty bit of marketing, and gave the governor a chance to brag about the state’s improving employment figures. But the gesture also conveyed a serious message.
Businesses in Illinois, California and other states around the nation should recognize that when the economy crashed and state revenues plummeted, Florida did not simply boost taxes and keep government operating as usual.
The state aggressively cut government while also
Florida leaders understood that the private sector is the key to creating jobs, and slapping struggling enterprises with more taxes was no way to revitalize the economy.
It’s useful to compare Florida’s response to that of Illinois and California.
The Illinois Democratic Legislature increased the state’s income tax rate by 2 percent and nearly doubled its corporate tax rate to deal with its fiscal problems, including the nation’s most underfunded pension fund.
Californians passed a referendum that boosted the personal income tax of wealthy residents and added a quarter-cent to the sales tax — this, in a state with an already heavy tax hand.
As Scott points out in his letter to Golden State executives: “California’s general sales tax is the highest in the nation; their gasoline taxes are the highest in the nation; their personal income tax is the highest in the nation; and their corporate income tax is 60 percent higher than Florida’s. Unlike Florida, it is clear California does not have a climate for businesses to succeed.”
According to the independent government watchdog Florida TaxWatch, Florida ranks 32nd in state and local tax revenue per capita. California is 11th, while Illinois is 17th.
Yet Dominc Calabro, the CEO of TaxWatch, reminds us that taxes alone do not determine where business will locate and thrive.
Workforce, market, education, quality of life and transportation systems are often more important concerns in a company’s location decision.
It’s when companies narrow their choice to a few regions based on those factors that the cost of living, including taxes, becomes a major concern.
So maintaining a reasonable tax burden does give Florida a competitive advantage.
But state leaders also should keep in mind that low taxes won’t attract top corporations if we have lousy schools, clogged roads and a spoiled environment.
Their charge is to find the balance between investing wisely in the future and keeping government expenses under control.
While we have taken issue with some cuts in the last few years, we believe Scott and the Legislature have done a mostly admirable job of managing expenses during difficult times.
The state’s fiscal restraint gives companies assurance they won’t be hit with unexpected costs – something they don’t have in California or Illinois, where leaders quickly try to tax their way out of any financial problem.
To be sure, some lawmakers can be hysterical about taxes, which provide the services — transportation, schools, law enforcement, water supply — that enhance the state’s commerce and appeal.
But it can be all too easy to spend other people’s money. It’s helpful when elected officials try to resist the temptation.
We hope those business executives in California and Illinois view Scott’s letter as more than a gimmick. Florida leaders have demonstrated through the recession and the recovery they understand government self-discipline is the key to a healthy business climate.
Out-of-state business leaders who buy a “one-way” ticket to Florida won’t encounter any startling tax surprises.