By Bethany Blankley
The Center Square
July 23, 2021
Among the three most populous state – California, Texas and Florida – Florida outperforms the others, whereas California fares the worst, according to several reports.
Over the past year, Florida surpasses Texas and California with recording the most non-farm job growth, the best overall economic outlook, best business tax climate and the lowest taxpayer burden.
In 2020, more businesses filed for bankruptcy in Texas than in Florida or California, and California recorded the first population decline in its history and held the highest or near highest unemployment rate in the nation.
From February to April 2020, when state government shutdowns began, non-farm employment declined by 15.3% in California, 13.9% in Florida, and 11.1% in Texas, according to Federal Reserve economic data compiled by the Research Department at the Federal Reserve Bank of St. Louis.
California, the largest U.S. state by population, is home to about 39.5 million people. Texas, the second largest, has about 29 million residents. Florida is third with about 21.5 million.
From April 2020 to May 2021, non-farm employment increased the most in Florida, by 10.4%, followed by 9.4% in California and 9% in Texas.
Prior to the state shutdowns, labor productivity in the private nonfarm sector rose in 45 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported. This was the highest number of states reporting positive productivity growth since 2010.
In 2020, California led the nation in its contribution to national growth; its 6.1% growth in labor productivity contributed nearly one quarter of the nation’s 3.6% growth. That quickly reversed after 15 months of lockdowns, with California still having the highest or near highest level of unemployment in the nation.
Before state shutdowns, however, data from the American Legislative Exchange Council found that from 2015 to 2020, Florida’s economic outlook surpassed Texas’. In its Rich States/Poor States 2015 report, Florida ranked 15th, Texas 11th, and California 44th. By 2021, that ranking changed with Florida ranking second, Texas ninth and California 45th. Texas’ economic outlook dropped because of its higher property tax burden, sales tax burden, and debt service as a share of tax revenue, among other factors.
While businesses continue to move to Texas because of its tax-friendly climate, Texas’ business climate is actually less friendly than that of Florida’s, a report by the Tax Foundation shows. From 2015 to 2021, according to Tax Foundation data analyzed, Florida’s business tax friendliness ranking rose from fourth place from fifth place, while Texas’ improved from 14th to 11th.
California’s business friendliness worsened, moving to 49th place in 2020, with residents and businesses citing the high cost of living and high tax climate for relocating. According to the most recent data analyzed by Truth in Accounting, California’s taxpayer burden was around $21,100, meaning each taxpayer would have to pay this amount to pay off the state’s debt.
Those considering moving from California would have a lower tax burden in Florida instead of Texas, Truth in Accounting notes. From 2015 to 2019, the amount of money Texas taxpayers would owe to pay off the state’s debt increased from $7,700 to $11,300, ten times greater than that of Florida. Currently, Florida taxpayers would owe $1,600 to pay off the state’s debt.
While the business tax climate reportedly improved in Texas from 2015 to 2020, the state shutdown hit businesses hard, resulting in Texas leading California and Florida with the greatest number of business bankruptcy filings in 2020, according to data from the Administrative Office of the U.S. Courts.
In 2015, Florida and Texas saw about 2,000 businesses file for bankruptcy compared to 3,325 filed in California.
But by 2020, roughly 3,500 bankruptcies were filed in Texas, compared to fewer bankruptcies filed in California and Florida. California’s filings decreased to 2,431, as did Florida’s to 1,613.