PADT, Inc. Co-founder and Principal Eric Miller discusses how taxes and regulations are, in fact, smaller contributors in regard to attracting out-of-state tech companies to Arizona.
As our state legislature and the governor starts their annual back-and-forth on the state budget, there is much discussion about making Arizona attractive to business by lowering taxes and removing burdensome regulation. I get it. Both issues factor into the calculation companies make when they look at locating or growing in the state. However, a black-and-white view on both drives some to give them more weight than is healthy for business. And worse, they ignore other critical factors.
If we want to attract more technology companies to our state, we have to take a measured approach and put as much or more emphasis on those other factors. The goal of most companies is to increase the value for shareholders, if it’s a public company, or the return on investment if it is privately held. In many cases, and especially compared to our neighbor to the west or states in the Northeast, the impact of taxes and regulation can be significant. It can even be debilitating.
For many businesses, however, taxes and regulations are smaller contributors to the equation. They care about roads, universities, and people.
INFRASTRUCTURE: If you are making a physical product or have significant computer and communication needs, you need good infrastructure. This includes roads, rail, broadband, and especially power. Arizona is lucky; we invested in those things over the years. Our roads are good and not nearly as congested as other growing tech hubs. We have lots of fiber in the ground and some rail.
TOP UNIVERSITIES: The quality and reputation of our higher education system is critical to tech companies. First, the executives who decide where to locate, want their families to have the best options. They also want to hire as many top employees locally as possible—employees with college degrees. And for tech, top universities create and attract the top talent they are looking for.
WORKFORCE: When all the factors for location are weighed, nothing comes close to the importance of the right local workforce. In tech, you need a good pool of educated, creative, and intelligent people. And not just with advanced degrees. The need includes manufacturing, technician, and clerical employees. Attracting that type of worker is just the start—it is critical for retention.
We don’t have to be like California to have those things, but we also don’t have to become the underfunded and unregulated Wild West. Like everything, it is a balance — a balance that reasonable leaders in our great state of Arizona can manage.
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