In December, President Trump signed into law the Tax Cuts and Jobs Act, which was notable for giving substantial breaks to American businesses. Included in the act was a significant cut in the maximum federal business tax rate, reducing it from 35% to 21%.
Regardless of the implications of this new bill for low-and middle-income Americans and for the programs that may soon lack funding, the tax cuts were unquestionably good news for American business in what has already been a boom time for many companies. Despite a sell off earlier in the year, the Dow Jones Industrial Average is near record highs, The economy has added jobs for 87 straight months, and GDP has grown for seven straight years.
This period of prosperity has by no means been even across the country. While GDP grew by an aggregate annual rate of 1.5% over the past five years, it declined in seven states, including by more than 5% in Alaska.
A number of factors can explain the regional differences in economic growth, including the varying business climates across states. While many factors affect the success of a region’s businesses, socioeconomic conditions, differences in geography, and regional regulations contribute to an overall business environment. Depending on these conditions, running a successful business in one state can be much easier than in another.
To determine which states have the best and worst business climates, 24/7 Wall St. identified and reviewed nearly 50 measures of doing business. These were divided into eight major categories: economic conditions, business costs, state infrastructure, the availability and skill level of the workforce, quality of life, regulations, technology and innovation, and cost of living.
A number of region-specific policies, costs, and regulations affect a state’s business climate, including liability and oversight laws, utility costs, insurance requirements, and tax policy.
Correction: A previous version of this piece incorrectly listed some changes in working-age population. These errors have been corrected.