They say imitation is the sincerest form of flattery — and for Texans and Floridians, it’s also been a driver of economic success.
While Florida has often followed Texas’ lead of promoting economic growth through Texas’ model of lower taxes and spending and less regulation, the Sunshine State recently has jumped ahead when it comes to tackling corporate welfare. Texas should take note of this development if it hopes to stay abreast of its friendly rival.
By gradually reducing the growth of government over the past 13 years, Lone Star State leaders have enabled the private-sector economy and individuals to thrive. The state boasts no personal or corporate income taxes. Since 2013, state lawmakers have provided Texas taxpayers with more than $5 billion in tax cuts. And last year, the Legislature adopted a budget that limited spending growth to less than 3 percent.
The results speak for themselves. Over the past decade, Texas has added 1.3 million jobs — the most of any state in the country — and has become the nation’s leader in exports. Each year, more companies flock to Texas from nearby states to do business. Low-spending Texas even boasts the second-lowest adjusted poverty rate among the 12 largest states.
Florida was wise to take note of these gains and responded with similar improvements of its own. Since 2011, its Legislature and governor have initiated a series of pro-growth reforms that have helped make Floridians more prosperous. They reduced taxes by more than $1 billion in just the past two years — and they cut 3,200 unnecessary regulations.
As in Texas, these reforms have spurred enormous growth and opportunity. Florida has added more than 1 million jobs in the past five years alone, the unemployment rate has dropped below 5 percent, and the state’s economy is growing 23 percent faster than the national economy.
Unsurprisingly, such success has also attracted new people and new businesses to the Sunshine State. In fact, from July 2014 to July 2015, Florida’s population increased by more than 350,000 people, making Florida the sixth most-popular state people moved to in 2015. The majority of these new Floridians escaped from states with higher tax climates, like California and Connecticut, according to federal data. This migration not only spurred growth, but it also helped Florida’s struggling housing market.
But tax cuts and fewer regulations aren’t the only way to spur economic growth. Florida state lawmakers have also taken important steps toward creating a level economic playing field by eliminating special business incentives and carve-outs.
Exhibit A is state lawmakers’ refusal to approve any new funding for Enterprise Florida Inc., a so-called public-private partnership that doles out taxpayer dollars to well-connected businesses. The call for $250 million in new funding for Enterprise Florida had come with the promise it would grow the economy and create more jobs. However, lawmakers in the state House knew better and ultimately prevailed, refusing to go along with increasing funding for these corporate handouts.
Rejecting new funding for Enterprise Florida positions the state for success. Florida already provides a competitive marketplace, and by removing funding for special help to politically favored companies, it relieves the vast majority of companies from having to subsidize their competitors.
From a Texas perspective, this isn’t necessarily good news as it puts Florida in a more competitive position against the Lone Star State. Texas currently gives more than $2 billion each year through subsidies, abatements, and other incentives — including the Texas Enterprise Fund — to well-connected businesses and industries.
There is a myth among “economic development” professionals that states have to use taxpayer money to lure new businesses. But Texas and Florida are proving this wrong. By providing a more level playing field, where everyone can compete and profit, Florida might convince more businesses to choose it over Texas in the years ahead.
Therein lies the beauty of economic competition among the states. Whereas Florida has benefited from imitating Texas’ model of economic growth, Texas might well learn a thing or two about eliminating corporate welfare.
It’s a win-win for both states, with plenty of flattery to go around as the two are showing both the rising and staying power of pro-growth reforms. The rest of the country should take note.
The Texas Public Policy Foundation is a 501(c)3 non-profit, non-partisan research institute. The Foundation’s mission is to promote and defend liberty, personal responsibility, and free enterprise in Texas and the nation by educating and affecting policymakers and the Texas public policy debate with academically sound research and outreach. Funded by thousands of individuals, foundations, and corporations, the Foundation does not accept government funds or contributions to influence the outcomes of its research. The Foundation is guided by the principles of: Liberty, Personal Responsibility, and Free Enterprise. This article appeared at: http://www.texaspolicy.com/blog/detail/rivalry-helps-drive-florida-and-texas-to-economic-success
