States to see increased economic competition

AS THE U.S. BECOMES MORE COMPETITIVE GLOBALLY, STATES WILL NEED TO ADJUST

FISCAL REFORM OR DECLINE

The pressure on States to reform their tax and regulatory environment is now going to become a matter of survival. The competition for more companies and more jobs is going to now go into high gear. North Carolina has announced that Triangle Tire is going to build a new plant in their state that will employ 800 workers. Much of the U.S. tire production had been moving off shore and this is a good sign for the future. Many companies are announcing expansion of their facilities in the U.S.. Who is going to get those new plants and those jobs will depend on who has the most attractive environment.

States like Illinois, which is bleeding population, will now be required to reform their tax and regulatory system or face a rush for the exits by both their residents and their companies. Some, of course, are tied to the state for 1 reason or another, but you can bet they will not be expanding in these high tax states.

The most vulnerable are New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Illinois, Vermont, Minnesota and California. These states have high fixed costs with union contracts and pensions, and  burdensome regulations. They will now have a window as small as 24 months to make sweeping changes or face a dismal declining future for their states. While they have a skilled workforce and good infrastructure they will have a limited time to become competitive. If they fail, their more talented workers will be heading south and west.

As population declines and companies leave they may be tempted to adopt the "Detroit Plan" of raising taxes on the remaining.This will result in a disaster, and a shift of economic and political power out of their states. It is dilemma a long time in the making. Many have been calling for these necessary reforms for years, now the time is up, reform or fall into the abyss.