The House Small Business Committee, led by Chairman Sam Graves (R-MO), today highlighted the small business growth policies of state governments that have highly successful economic strategies.
The hearing included the testimony of state officials from South Dakota, Texas, Virginia and Kansas. These states consistently rank in the upper tier of various "best states for business" rankings, including the CNBC 2013 Best States for Business ranking announced yesterday. CNBC ranked South Dakota first, Texas second and Virginia in a tie for fifth.
The Committee heard testimony from state officials on the ways they are enticing and keeping business in their states. Smart regulation, lower tax regimes, low cost of business formation and access to capital were discussed.
"Small businesses know how to create jobs, and the government's best role is to let them," said Chairman Graves. "Small firms deal with multiple layers of government at the national, state and local levels. A combined government stranglehold that is too tight can impede job creation. These successful states are taking proactive steps to recruit businesses, and loosen the reins with competitive tax rates and lower regulatory burdens. It's no surprise that the states that are seeing consistent job growth have taken common sense steps to reduce the government's grip."
Pat Costello, Commissioner, South Dakota Office of Economic Development, Office of Governor Dennis Daugaard, said, "First and foremost, our tax climate is unmatched by any other state in the nation. Only in South Dakota do businesses enjoy the benefits of no corporate income tax, no personal income tax, no business inventory tax, no personal property tax and no inheritance tax. This structure leaves the money where it belongs -- in the pockets of our businesses, creating a more favorable environment for long-term business growth."
Aaron Demerson, Executive Director, Texas Office of Economic Development and Tourism, Office of Governor Rick Perry, said, "It didn't happen by accident -- it happened because, over the last decade, Texas leaders have made principled, thoughtful decisions by not over-taxing, over-regulating or over-litigating our citizens. In Texas we have an obligation, responsibility, and goal to the taxpayers to take the necessary steps to make government more efficient and streamlined while reducing spending without raising taxes."
Jim Cheng, Secretary, Department of Commerce and Trade, State of Virginia, Governor Bob McDonnell, said, "Last year, we launched a regulatory reform initiative to reduce the number of burdensome regulations placed on small businesses. Since September 2012, 562 sections in the VAC have been identified and 157 sections have already been repealed Ultimately, it is not what the federal or state government can do for small business that matters, but how the government can ensure it does not erect unnecessary barriers to job creations. We must ensure an environment conducive to economic vitality and guard against extinguishing the entrepreneurial spirit with overly burdensome laws and regulations."
Nick Jordan, Secretary, Department of Revenue, State of Kansas, Governor Sam Brownback, said, "Starting this year, Kansas began exempting non-wage business income from state income tax. This is the type of income earned by the majority of small Kansas businesses, which typically are structured as LLCs, sole proprietorships, or S-corps, commonly referred to as "flow-throughs' since the taxes for this business income are filed on individual income tax returns rather than corporate tax returns. By eliminating the state income tax for many small businesses, we are sending the message that every business, every innovation, and every entrepreneur matters when it comes to creating jobs in Kansas."