Better Get Ready to Tie Up the Boat in Idaho…or Nevada

By October 9, 2008Economy, Taxation

During last week’s NAM board of directors meeting, we had a chance to chat with a California manufacturer who related several of no doubt many available horror stories about the state’s regulatory and competitive environment. This manufacturer continues production in order to be close to customers, but don’t think Mexico or Nevada aren’t increasingly attractive alternative sites.

Which leads us to this post from Gino DiCaro of California Manufacturers and Technology Association, excerpted from the Mpowered blog:

[One] little item I saw this week brought comfort and firmly bolstered my trust in the democratization of our financial markets and systems.  That morsel was the announcement that the Nevada Secretary of State is getting ready to launch an economic development package and website titled “Why Nevada“.  I know, run to the presses.   It’s never been done before!  This is just crazy!   It IS important however, because of the litany of low tax climate incentives being used to recruit manufacturing and other industries when everyone else is looking to find immediate State and Federal revenues with taxes, rescue packages, loans, etc.  Nevada understands they need to build an attractive and competitive market for the biggest revenue augmenter in the world — a well paid job base — and they know that competitive accommodations matter more, now.  The “Low Tax Climate” items listed on the new site include:

    * No Business Income Tax
    * Income Tax is Prohibited
    * No Estate Tax
    * No Franchise Tax
    * No Gift Tax
    * No Inventory Tax
    * No Tax on Corporate Shares
    * Property Tax Increases are Limited

Cost implications always matter for manufacturing and other employers, but as entire consumer markets seek less product for less money and governments covet more money from fewer sources, most employers will absolutely require less expensive zip codes for the genesis and production of their products.  My bet is that the real catharsis from the economic depression will come quicker to Nevada and perhaps other state’s that foster large campaigns to dynamically improve their job base and, as a result, increase economic activity and gain more private and public revenue … even if it means foregoing a few immediate revenues.

As California’s own legislature and Governor contemplate Constitutional Conventions, special Legislative sessions, a possible budget re-do, unconventional loans, etc. they should look to Nevada for ideas for their very own “sleep aid” and discuss very seriously and quickly a major campaign with real cost reduction policies to retain and recruit what we need most.

NAM President John Engler likes to remind people that in the old days — 20 years ago? — states competed against states to attract businesses. Now they’re competing against countries, too, and it’s not just Mexico.

Leave a Reply