Forbes has completed their first ever ranking of Top States for Business. The Commonwealth of Virginia ranked in the top ten in all six categories, while no other state rated in the top ten in more than three categories. Forbes reports that very low business costs, strong economic growth and excellent quality of life helped the state get the top spot.
Texas ranked second to Virginia at the top of list, while West Virginia, Mississippi and Louisiana were at the bottom of the rankings. It must be noted that Mississippi and Louisiana were devastated by Hurricane Katrina.
Individual metrics were weighed against information gathered by research firms such as Moody’s Economy.com, according to Forbes. Each state’s incentive programs were evaluated by Pollina Corporate Real Estate, a commercial real estate consulting firm. Virginia topped 50 states that were ranked on 30 different metrics in categories including:
- Business costs
- Economic environment
- Growth prospects
- Quality of life
- Regulatory environment
Forbes has been ranking the Best Metro Area for Business for eight years. Many of the factors, including business and living costs, job and income growth, educational attainment, net migration and crime rates were also applied to the Top States for Business survey.
Building on their Metro Area rankings, Forbes projected job, income and gross state product growth. They evaluated venture capital being applied to areas and the number of new businesses starting within the past five years. The role that government played in the different business climates through environmental and labor laws, taxes and other incentives were also examined.
On the negative side of Virginia’s high ranking in the Forbes survey, the state had the fourth-largest drop in home sales in the U.S. in the second quarter of 2006. The National Association of Realtors reported that home sales slid 23.9 percent in this past quarter, compared to the same quarter a year previous, according to Charlottesville Daily Progress.
Twenty-eight other states also showed declines for the second quarter in 2006. The Charlottesville Daily Progress reported that the three states with greater declines were Arizona (–26.9 percent), Florida (–26.7 percent) and California (–25.3 percent).
David Seiders, chief economist for the National Association of Home Builders, told the Charlottesville Daily Progress, “An increasing number of potential buyers are adapting a wait-and-see attitude because of uncertainty about where the housing market is headed.”
The Tax Foundation reports that the U.S. 39 percent corporate tax rate was the sixth highest of the 30 members of the Organization for Economic Co-operation and Development (OECD) http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html five years ago, according to Forbes.
Today, the U.S. has the highest tax rates in the OECD, as other countries, like Germany and Canada, have lowered their corporate taxes. With litigation costs at $250 billion per year or 2 percent of our gross national product, it’s no wonder that U.S. corporations move jobs overseas seeking less expensive labor.