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The state of Texas has one of the largest economies in the world. In fact, if it were a country it would rank as the eighth-richest in the world. Its gross domestic product, perhaps he most popular measure of economic activity, tops $2.9 trillion, placing it ahead of most countries including Canada, Mexico and Russia.
And it looks like even better days are ahead. A new report from the Internal Revenue Service indicates that our state’s capacity for wealth generation is growing faster than any state in the country, driven by migration of key businesses, as well as wealthier residents. Other larger states including California and New York lost drivers of wealth in the same report.
Actually, the report shows that Florida had the largest influx of taxpayer wealth while South Carolina had the highest rate of immigration among the states. Texas, however, stood out by combining the two metrics and provided the highest growth in wealth-producing new residents, showing the fastest growth in new taxable income.
The document concludes, as economic analysts do, that our state policies are more conducive to economic growth. Texas, and local, officials should note that success, and strive to maintain those beneficial policies.
In other words, keep doing what they’re doing.
The IRS migration data show that several factors contribute to the influx of wealth. Not only is the Dallas-Fort Worth Metroplex the nation’s fastest-growing large metropolitan area, but others including Austin, Houston and San Antonio are also among the most rapidly growing areas.
According to the report, that influx creates larger labor pools, especially of educated workers. That attracts business investment that leads to more, and more diverse, industries in the state, and creates a broader customer base that fuels economic activity ranging from home and new vehicle purchases to grocery store shopping and restaurant patronage.
Those factors combine to accelerate new commercial development and create more jobs, which feeds the cycle of even greater economic investment. As a result, the IRS finds that Texas isn’t just becoming larger, but more productive.
The report notes that Texas has a pro-business atmosphere that includes less regulation than many other states. Moreover, its lack of state income tax also attracts business owners and other wealthier residents to move here.
Locally, we can note Elon Musk’s transfer of corporate offices of SpaceX, and other operations, into Texas from California. He also reportedly now lists Starbase, near Boca Chica Beach, as his primary residence, avoiding billions in state income tax he would have to pay in other parts of the country.
Some people insist that we need a state income tax to fund infrastructure development and public services. However, the IRS report and other analyses find that increased economic activity generates greater amounts of corporate and sales tax revenue, offsetting the need to confiscate more money from individuals.
Texas has created a climate that helps bring wealth into the state and generate even more. That climate doesn’t only benefit our new residents, but all Texans.