North Carolina leads another business-climate ranking for the Southeast, this time rated sixth nationally by 24/7 Wall St., a financial-research company.
The company released its 2020 Best and Worst States for Business ranking Friday, with Massachusetts topping the list and West Virginia at the bottom.
24/7 Wall St. evaluates eight primary categories: economic conditions; business costs; state infrastructure; availability and skill level of the workforce; quality of life; regulations; technology and innovation; and cost of living.
“Part of the reason North Carolina ranks so highly is the relatively low cost of doing business,” 24/7 Wall St. said.
“The average retail price of electricity per kilowatt-hour is lower than in most other states and, according to the Tax Foundation, North Carolina has a more favorable business tax climate than most states.”
Business-climate rankings have evolved over the past 13 years into a cottage industry that states and often politicians use to spotlight their marketplaces and boast of their economic prowess.
For example, North Carolina retained its top ranking in Forbes magazine’s Best States for Business released in December 2019.
It was the third consecutive year that North Carolina topped the Forbes list, which focuses on six categories: business costs, labor supply, regulatory environment, economic climate, growth prospects and quality of life.
North Carolina was ranked first in regulatory environment. Texas was second overall, followed by Utah, Virginia and Florida.
In July, North Carolina was third in CNBC’s 13th annual America’s Top States for Business ratings, behind Virginia and Texas.
The 2019 ranking tied with 2011’s as the highest for North Carolina. The state has averaged a No. 6 ranking, with a low of 12th in 2013.
North Carolina’s Republican legislative leaders often cite the state’s high ranking with Anderson Economic Group, Chief Executive magazine, Forbes, CNBC, George Mason University, FitSmall Business.com, Site Selection magazine’s Prosperity Cup, the Tax Foundation, and U.S. News & World Report as proof of their hard economic work, particularly with tax reform.
The Republican-controlled N.C. General Assembly has reduced the state’s corporate-tax rate from 6.9% in 2013 to 2.5% in 2019 — the lowest in the country for states that have a corporate tax rate. The result has led to a $600 million annual reduction in corporate tax dollars paid to North Carolina.
Economists, however, tend to believe that states and their politicians are limited in what they can do to grow their economies outside of how the national economy is performing.
A 2018 report titled “Corporations over Carolinians?” from the liberal-leaning N.C. Justice Center said that “North Carolina’s corporate tax-rate cuts failed to fix our most pressing economic problems.” The co-authors are Patrick McHugh, an economic analyst for the center’s Budget & Tax Center, and Alexandra Sirota, its director.
Corporate tax-rate cuts “have failed to create pathways out of poverty or generate enough jobs that pay a living wage,” the authors wrote. “Continuing to cut taxes will only undercut our ability to invest in people and communities.
“By reducing our commitment to vital public goods, like schools, roads and health care, corporate tax cuts are putting North Carolina’s economic future at risk.”