South High School
Startups and relocating companies consider a number of factors in deciding where to locate. Certainly the business tax and regulatory climate is a consideration, but not always the only or even primary consideration. Depending on the type of business, companies look at other factors such as the quality of the state's workforce, transportation, power and communications infrastructure, the economic climate, and prospects for growth.
Companies also consider quality of life, such as health care, public education, colleges and universities, crime rates, poverty, and the natural environment. They want a good, healthy work and home environment for their employees and their families. CEOs and senior management have families, too.
Tennessee already scores well in terms of its business taxes and regulatory climate, and we have a pro-business, anti-labor legal climate. The state is also happy to dole out cash for relocation assistance, tax incentives, infrastructure development, and workforce training.
But all of that comes at a cost. We have some of the highest sales and property taxes in the country. We have one of the highest unemployment insurance rates because of chronic unemployment. CEOs are likely surprised when they find out we also have one of the highest income taxes on interest and dividends in the country.
We have high numbers of uninsured and people on public health care, which drives up taxes and health care costs for everyone including employers. We have a high poverty rate, meaning less buying power which limits markets for a company's products. We have one of the least qualified workforces (just look at how much money we hand out for remedial training of a relocating company's workers). We have some of the worst education outcomes in the country, with low high school graduation rates and low numbers of college educated workers. We have virtually no environmental regulation, at least in terms of enforcement, which affects our natural environment and, ironically, threatens tourism which is one of our key economic assets.
So why would any company want to locate here? Hard to say unless they're just looking for government handouts to exploit our cheap, unskilled labor in a wild west regulatory environment that lets them ride roughshod over state and local government, regulators, the courts, their workers and their communities.
So what are the governor and our genius Republican legislators doing about it? They can't cut taxes any more. We're already broke. Instead, they're passing more "business friendly" laws to further reduce regulation, including environmental regulations. They want to limit worker protections from fraudulent denial of unemployment claims and their right to compensation for workplace injuries. At the same time, they want to protect corporations from liability for mistakes and malfeasance while denying justice for their victims. They're on a mission to weaken or eliminate public education. They want to exclude us from health care reforms that might someday start breaking up insurance company monopolies that leave millions of working poor out in the cold.
Further, their "social agenda" seeks to punish diversity and makes us a laughingstock. For example, how do the families of German VW executives feel about "English only" mandates? Would a gay or Muslim entrepreneur feel welcome to start up a business here? They also want to make it easier to get a usurious payday loan or purchase a gun than to get a good education. Commercially operated prisons are one of our few growth industries.
So what kinds of companies will these "reforms" attract? Will they be successful, forward thinking, socially responsible companies who are concerned not only about next-quarter profits but also sustainability, diversity, their workers, their families and their community?
Probably not. It's short sighted and misguided policy. The companies we want aren't looking to locate in a stupid, backward thinking state that is a national embarrassment just for a few more tax breaks. They also want a level playing field instead of a good ol' boy business environment where you have to know (and line the pockets of) the right people to operate and survive.
Republicans running our state government are barking up the wrong tree. Henry Ford realized over 100 years ago that if his workers couldn't afford his product he didn't have a viable business. More recently, Warren Buffett was embarrassed that he paid a lower income tax rate than his secretary. On the other hand, his crystal ball suggested that acquiring the largest mobile home manufacturer (which happens to be in Tennessee) was a good investment given the path we are on. That's a little scary, if you think about it.
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