Friday, October 05, 2007

Three Related Stories, Let's Connect The Dots

1. From today's Detroit Free Press article "Taxes May Hinder Attracting Businesses":

Selling Michigan as an attractive and low-cost place to do business just got a little harder.

The expansion of the state's sales tax to many service providers will raise the cost of business-to-business transactions and could hurt Michigan's enterprise reputation at a time when it can least afford it, economic development experts said Tuesday.

To be sure, the increase in taxes won't necessarily deter companies interested in Michigan. Taxes are just one of several factors that affect businesses' decisions about where to put a new factory or headquarters.

2. From today's NYTimes article "More Doctors in Texas After Malpractice Caps":

Four years after Texas voters approved a constitutional amendment limiting awards in medical malpractice lawsuits, doctors are responding as supporters predicted, arriving from all parts of the country to swell the ranks of specialists at Texas hospitals and bring professional health care to some long-underserved rural areas.

The influx has flooded the medical board’s offices in Austin with applications for licenses, close to 2,500 at last count.

“Doctors are coming to Texas because they sense a friendlier malpractice climate,” he said.

3. From U-Haul Reservations, a one-way rental from Austin, TX to Detroit, MI for a 26-foot truck is $661, and a one-way rental from Detroit, MI to Austin, TX is $1,583.

Bottom Line: Although taxes might not be the only factor for business location decisions, neither are malpractice limits for physicians' locations. But the fact that thousands of physicians are going through the trouble of moving to Texas demonstrates that taxes and regulations do play a role in business location decisions. Many physicians are actually independent, small businesses who move to where the business climate is most friendly. Making Michigan's business climate less friendly with higher taxes has to have some effect, the only question will be the size of that effect.

Given the difference in one-way truck rentals between Detroit and Austin, it sure seems like a LOT more people are moving out of Michigan to Texas, than the other way around.


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