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View Diary: Rick Perry begging California businesses to head to Texas (205 comments)

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  •  Economic development (0+ / 0-)

    I'm speaking to the tech industry here, but most high value add industries fall in the same category.

    State taxes are relatively insignificant in terms of where businesses go.  (Wall Street firms are greedy.  But they consistently cluster in lower Manhattan -- OK, a lot of them are moving to Midtown or Brooklyn Heights. This is one of the higher tax places in America.  When they do leave NYC, they go to Jersey City, not a low-tax haven but one PATH stop from Lower Manhattan.)  To the extent they care, they care about property taxes, which tend to correlate to real estate costs -- the latter are significant because most of the differences in wage levels and cost of living are correlated to housing costs.

    However, all of this is small compared to the stuff that really matters.  High tech firms tend to locate in the same places (Silicon Valley, Seattle, Massachusetts, New York City, Raleigh-Durham, Austin) because that's where the people, the venture capital, and the support services are.  Texas is on that list because a lot of state and federal tax money went to the Univ. of Texas to make it one of the top STEM universities in the world.  Thus, the tech and biotech industries came, and over time the infrastructure to make them stay there began to set in place.  (Not coincidentally, Austin is a bright blue pond in a sea of red.)

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