September 27, 2009 in Business

State’s high marks a positive for business

By The Spokesman-Review
 

Washingtonians should be blushing – or flushing, depending on how seriously one takes outsider rankings of a state’s desirability as a place to do business.

Washington scored a rare three-fer last week.

On Tuesday, the Tax Foundation placed the state ninth in its Business Tax Climate Index, which measures the overall simplicity, transparency, stability, neutrality and pro-growth characteristics of state tax structures. It may be the first time Washington has done so well.

Forbes magazine, the self-proclaimed “capitalist tool,” followed up Thursday with its annual rankings of states as places to do business, placing Washington second to Virginia in its calculations.

Less noticed was a Monday release from the Corporation for Enterprise Development, which gave the state an A on its Assets & Opportunity Scorecard.

Discouraging as the economic environment is now, especially for Washington’s 328,000 unemployed, reminders that Washington has much to offer business are welcome.

That’s certainly the way Gov. Chris Gregoire and the Association of Washington Business responded.

In a statement that glossed over the odder and/or less positive Forbes conclusions, the governor said, “Our high ranking is a testament to Washington’s strong work force training programs, our schools, the ingenuity of the state’s companies, our superior global ties and our desirable quality of life.”

At 24th, Washington did not do well in quality of life, at least by Forbes’ reckoning, which measures schools, crime, health, poverty and cost of living. New Jersey was fifth.

Did anybody look out the window?

It might be a puzzlement, too, that Washington ranked second in labor, based not on the work force training rightly noted by the governor, but educational attainment, immigration and projected population growth. Unfortunately, Forbes’ methodology resembles that of Microsoft, which often bemoans Washington’s inability to provide enough homegrown talent to meet its needs.

AWB President Don Brunell said Washington did well in both rankings because the governor and legislators did not respond to a $6 billion budget gap by raising taxes or discarding incentives for business investment in research and capital goods. One seldom-mentioned plus, he noted, is a uniform property tax system that treats commercial and residential real estate equally, instead of systems that subsidize the latter with the former.

“You have to be encouraged that we are climbing in the ratings instead of dropping,” said Brunell, adding that he hopes companies who pay attention to state rankings will look more kindly on Washington as a place to invest.

His perpetual caveat: Washington’s unemployment and work comp systems are too expensive.

As the Washington Policy Center noted in its response to the Tax Foundation rankings, the state’s fundamental advantage is the absence of an income tax. The great flaw is the reliance on a very high, very regressive sales tax.

Washington will probably never overtake Virginia in Forbes. The historic and beautiful Old Dominion has one overwhelming advantage: the other Washington is just across the Potomac River. When a big part of your population works for, or on, the federal government, the quality of life is always good.


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