The states with the lowest business taxes attract the best companies, no? States with less government spending, regulation and unions have the best economies, right? Wrong on both accounts. In fact, a recent study by Michigan Future Inc. found that the best predictor of a state's prosperity is the proportion of adults with a four-year degree or more.
Statistics counter each other in the argument for which side of the tax war the government should side with. Business tax cuts do not necessarily trigger economic growth, nor is there a specific correlation between college graduates and economic stability. However, growth is nearly two times larger for states with lower business costs than states with costs nearly doubling that..
However, Michigan's competitor states pay an average of three percent less in taxes in addition to (averaging) higher wages, benefits and utilities. From a business perspective, costs do matter. If businesses are driven to states with lower tax burdens, jobs for Michigan graduates--despite the increasing percentile of those with a four-year education--will be non-existent.
Although the debate will continue, business owners will agree that lower taxes mean more expendable money for business costs including hiring, supplies and research for expansion. Some statistics may explain that the most successful states are not necessarily those with the lowest taxes. However, if companies have incentive to open doors in states with a lower business tax, do not be surprised if future board room meetings discuss the option of hopping the border.