USA - TEXAS Trends and Developments Contributed by: Brad Holdbrook, Mary Mendoza, Michael Coleman and James Barnett, Haynes and Boone, LLP
Economic Policies and Business Climate Over the past 12 months, Texas has solidi - fied its reputation as a leading destination for businesses, driven by its favourable economic policies and business climate. Recent develop - ments provide insight into how Texas cities have become attractive hubs for economic growth and enterprise. Texas has been recognised nationally for its prime business climate, a testament to the state’s strategic approach to fostering econom - ic growth. The state’s economic policies, par - ticularly its business-amenable tax and regula - tory environment, have played a pivotal role in attracting businesses from across the country and around the world. Texas offers a competitive advantage with no personal or corporate income tax at the state level, which stands out as one of the most tax-favourable environments in the United States. The state has experienced significant job growth, adding the most jobs in the nation over the last 12 months. This growth is not only a reflection of the state’s robust business environment but also its diverse economy, which spans various sectors from technology to manufacturing. The expansion of the labour force to historic highs underscores Texas’s capacity to attract and retain talent, further fuelling its economic dyna - mism. Texas’s economic strength is bolstered by stra - tegic incentives aimed at business development, including the Texas Enterprise Fund. The Texas Enterprise Fund is a programme which awards grants to businesses which select a site in Texas for a project or series of projects when the sites initially under consideration included at least one Texas site and one site outside of Texas. Recipient businesses receive a “deal-closing”
cash grant calculated according to a uniform analytical model applied to each applicant upon deciding to pursue a project in Texas as well as fulfilling other financial and job-creation require - ments. Additionally, Texas’s commitment to infrastructure development ensures businesses have the necessary support to thrive, from trans - portation to utilities. These incentives, combined with a highly skilled workforce and an interna - tionally competitive higher education system, create fertile ground for businesses to grow and prosper. The state’s welcoming business climate, com - bined with its quality of life, has made it an attractive destination for both talent and invest - ment. Texas cities have seen an influx of skilled professionals and major corporations seeking to leverage the state’s economic advantages. This trend is exemplified by the relocation of companies from more regulated and higher-tax states to Texas, seeking economic freedom and opportunity. Texas local governments extensively utilise tax incentive agreements to stimulate economic growth, attract, and retain businesses. These agreements, primarily governed under Chapter 380 of the Texas Local Government Code for cit - ies and Chapter 381 of the Texas Local Govern - ment Code for counties, enable municipalities and counties to abate taxes and disburse grants or services at minimal to no cost to promote state and local economic development and stim - ulate business and commercial activity. These provisions grant local governments significant flexibility in negotiating directly with developers and businesses, allowing for a broad spectrum of incentives to encourage development within their jurisdictions.
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