Category Archives: Texas

The love of taxes is the root of unhappiness, Part II

New evidence from the dismal science confirms what social science has already shown: the love of taxes is the root of unhappiness.

The original social science, from the December 2009 issue of Science, indicated that states with the highest taxes also have the least happy residents.  Residents of high tax states not only have less money to spend on other things that make them happy, they don’t enjoy many benefits in exchange for all their hard-earned tax dollars.  Roads, schools, and crime are no better (and in many cases worse) while their state governments borrow even more and spend disproportionately on public employee pensions and entitlement programs.  Their needs ignored at the expense of entrenched special interests, taxpayers get unhappy.  And then they get out.

From this one might argue causation; high taxes = unhappiness.  While we are certainly sympathetic to that point of view, we also have to wonder if it runs vice-versa, or at least cuts both ways: unhappy people like to raise taxes.

We are… happy.  And happy to report that’s true for our region as well.  NVSE readers already know that the Southeast’s advantages extend well beyond the matter of taxes and include lower public sector debt burdens, stronger job creation, the best climate for entrepreneurs, and a superior overall business climate.  (The actual climate happens to be conducive to a great quality of life as well.)

The more recent dismal science is courtesy of The Red-State Path to Prosperity, from Arthur B. Laffer and Stephen Moore in last week’s Wall Street Journal:

Consider the South. We predict that within a decade five or six states in Dixie could entirely eliminate their income taxes. This would mean that the region stretching from Florida through Texas and Louisiana could become a vast state income-tax free zone.  Three of these states—Florida, Texas and Tennessee—already impose no income tax. Louisiana and North Carolina… are moving quickly ahead with plans to eliminate theirs. Just to the west, Kansas and Oklahoma are also devising plans to replace their income taxes with more growth-friendly expanded sales taxes and energy extraction taxes…

All the empirical evidence shows that raising a state’s tax burden weakens its tax base. Still, too many blue-state lawmakers believe that a primary purpose of government is to redistribute income from rich to poor, even if those policies make everyone, including the poor, less well off. The obsession with “fairness” puts growth secondary.  Meanwhile, in the South, watch for a zero-income-tax domino effect.

Here Mr. Laffer further discusses how blue states are struggling to compete for businesses and workers with the Journal‘s Mary Kissel:

BPV completes successful exit from FSV Payment Systems

Ballast Point Ventures is pleased to announce a successful exit from its investment in BPV II portfolio company FSV Payment Systems, a leading provider of prepaid program management and processing services.  FSV is known for its expertise managing a broad range of prepaid programs for companies, government agencies, financial institutions, and incentive/marketing firms.  Under the terms of the transaction, Ballast Point Ventures, North Hill Ventures, Berkley Capital, and the other non-management investors sold their ownership stakes in the Company to U.S. Bank.  The acquisition combines U.S. Bank’s payments strength and prepaid expertise with FSV’s platform which will position the combined entity as one of the few financial institutions in the industry capable of providing efficient end-to-end prepaid programs and services for its clients.

Paul Johan, Partner with BPV, had praise for the management team:

The sale of our interest in FSV marks the end of a very successful three and a half year investment for BPV.  We are very appreciative of the outstanding job that Rick Savard and his team did in taking FSV from a solid growth company to a very profitable firm with a high profile in the prepaid sector.  They’ve done a fantastic job working with clients while leading a dramatic improvement to the service platform and technology capabilities of the company.  Rick and his team have created significant value for FSV shareholders and their customers.  We are delighted U.S. Bank will be working with FSV management to continue to build the business.

Additional detail can be found here.

Southeast dominates CEOs Top 10

For the eighth consecutive year, Texas has been voted the best state for business by Chief Executive magazine. 

The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and adds to the growing list of evidence that some states understand job creation better than others.  The 2012 edition of their annual survey of CEOs includes a feature on What Keeps Texas on Top:

The state is growing its own companies but also is displaying remarkable success in luring investments from other states, particularly California, which once again ranks last in our survey. A raft of small, technology companies have either relocated to Texas or moved key operations there.  Bigger California companies, such as Facebook, eBay and PetCo also have recently opened operations in Texas, and major manufacturers from different states, such as General Electric’s transportation unit and Caterpillar have located big new plants in Fort Worth and Victoria, respectively.  “Employers from around the nation and all over the world continue to look to Texas as the premier location for business expansion, relocation and job growth thanks to our low taxes, reasonable and predictable regulations, fair legal system and skilled workforce,” Gov. Rick Perry told Chief Executive.

Texas has powerful momentum and it’s difficult to see what could halt it…  The sheer diversification in its economy—all the way from wheat farming to semiconductors—suggests that the state could absorb many punches and keep on rolling.

What is StartupBus?

Wired describes it as:
Part road trip, part code jam, the annual competition plunges participants, known as “buspreneurs,” into two days of frantic business development on the open road to the South by Southwest conference  in Austin, Texas.”
What started in 2010 with one bus driving from Silicon Valley to Austin for the SXSW conference has grown into a 10-city competition to arrive in Texas with the best idea and compete for early-stage funding from a board of potential investors.  


This year Tampa has its own bus in the competition, and one of the teams on the bus includes former BPV intern Doug Smith.  You can read about Tampa’s entry at, and you can check out Inc‘s write-up from last year’s event.  Doug will be tweeting his team’s progress at @_BumperCrop, their entry that “helps local small-scale farmers and home-growers connect to local consumers to easily share and exchange their excess crops.”  You can also check out their project site, or follow @StartupBusFL for our state’s other competitors. provides real-time comprehensive coverage of the entire competition.

Best of luck to Doug and all his fellow Floridians!  We look forward to reporting back on your success.

The love of taxes is the root of unhappiness: update

The Tax Foundation has issued its 2012 State Business Tax Climate Index, which once again confirms that the love of taxes is the root of unhappiness.

We remain… happy.  And happy to report that’s true for our region as well.

When confronted with the argument that higher taxes = unhappiness, we wonder, even while remaining sympathetic to the point of view, whether or not it runs vice-versa, or at least cuts both ways:  unhappy people like to raise taxes.

This is just the most recent study – see also herehere, here, here, here, here, and here – to confirm the country is experiencing the rise of the high-tech South.

Another factor in the Southeast’s attractive growth potential – and one clearly related to taxes – is lower state debt burdens.  Some state governments, when faced with crushing budget deficits, respond with growth-stalling tax increases on the businesses that operate in their states.  (The problem worsens dramatically when one considers many states’ unfunded pension liabilities.)

Two states whose budget woes have garnered recent headlines include Illinois, which pushed through a 45% increase in corporate taxes – apparently triggering an exodus; and California, which is on the verge of running out of money – again.

Some states, like the aforementioned California, respond in other “desperate ways” which further undermine investor confidence and entrepreneurial spirits:  accounting gimmicks, delayed payments, issuing IOUs, or even more borrowing.  As we’ve written before, only one non-Southeastern state – Nebraska – has a lower debt-to-GDP ratio than FL (5th), GA (4th), TN (2nd), NC (3rd), TX and VA (tied for 6th).

State debt-to-GDP ratio (Source: AEI)








Southeastern cities dominate Forbes Top 10 list

Our region took 9 out of the 10 top spots in Forbes’ list of The Next Big Boom Towns in the U.S.  The rankings were done in conjunction with Mark Schill at the Praxis Strategy Group, and are based on job growth, attractive lifestyle, ease of starting a business, and a broad range of demographic factors.

We do love Phoenix, but these are several of the cities we and our entrepreneurs call home.

  1. Austin, TX
  2. Raleigh, NC
  3. Nashville, TN
  4. San Antonio, TX
  5. Houston, TX
  6. Washington, DC-VA-MD-WV
  7. Dallas-Fort Worth, TX
  8. Charlotte, NC-SC
  9. Phoenix, AZ
  10. Orlando, FL

Southeast dominates CEOs Top 10

For the seventh straight year, Texas has been voted the best state for business by Chief Exectuive magazine.

2011’s edition of their annual survey of CEOs includes an excellent interactive map.

The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and adds to the growing list of evidence that some states understand job creation better than others.



Southeast advantage in 25 high growth industries

Wells Fargo has released a study entitled “Employment Dynamics and State Competitiveness” which predicts 25 industries will drive employment growth in the next few years, and ranks states according to their likely ability to capitalize on those trends.  As with previous related studies – see here, here, here, here, here, here, here, and here – our region performs very well.

The team of economists in their Securities Economics Group credit (among other things) the availability of skilled workers in our region – both homegrown and those drawn to the quality of life.

States with a large number of high-growth industries that also have a large skilled workforce will be at a greater competitive advantage. This would tend to favor states, such as Georgia, North Carolina, Arizona, Virginia and Texas, which not only have a large supply of skilled workers but have also been successful at attracting such workers from other parts of the nation. Florida, which has more high-growth industries than any other state, would be in a stronger position if not for the weakened housing market, which has cut into worker mobility. The Sunshine State is making important enhancements to its university system to bring in more cutting-edge research, and this should pay off with an even better mix of high-growth industries in future years.

Would it be a Bowie Knife?

Joel Kotkin – blogging at Forbes New Geographer – puts a humorous title to a theme that has been well covered here and elsewhere:California suggests suicide; Texas offers the knife.

CEOs’ Best States for Business

Kotkin suggests 2010 will be used by future historians to mark the end of the California era and the beginning of the Texas one, citing as evidence this survey in Chief Executive magazine which ranks the states for their business environments.  CA not only ranks last, but is the only state to receive an ‘F’ in any category.

The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and it’s not the first time Texas has led the pack.  Kotkin writes:

Even more revealing is California’s diminishing preeminence in high-tech and science-based (or STEM–Science, Technology, Engineering and Mathematics) jobs. Over the past decade California’s supposed bulwark grew a mere 2%–less than half the national rate. In contrast, Texas’ tech-related employment surged 14%. Since 2002 the Lone Star state added 80,000 STEM jobs; California, a mere 17,000.

Of course, California still possesses the nation’s largest concentrations of tech (Silicon Valley), entertainment (Hollywood) and trade (Port of Los Angeles-Long Beach). But these are all now declining. Silicon Valley’s Google era has produced lots of opportunities for investors and software mavens concentrated in affluent areas around Palo Alto, but virtually no new net jobs overall. Empty buildings and abandoned factories dot the Valley’s onetime industrial heartland around San Jose. Many of the Valley’s tech companies are expanding outside the state, largely to more business-friendly and affordable places like Salt Lake City, the Research Triangle region of North Carolina and Austin.

… Ultimately the “green jobs” strategy, effective as a campaign plank, represents a cruel delusion. …Without subsidies, federal loans or draconian national regulations, many green-related ventures will cut as oppose to add jobs, as is already beginning to occur. The survivors, increasingly forced to compete on a market basis, will likely move to China, Arizona or even Texas, already the nation’s leader in wind energy production.

By the way, we have nothing against California.  It’s a beautiful state and a great place to visit.  We just wouldn’t choose to try and build a business there.

Tax break proposed for federally backed startups

The Austin Business Journal reports (subscription required) on proposed federal legislation to  provide small tax credits for equity investments made in companies which have already qualified for  federal grants.

In July we blogged about Rhys Williams’ testimony before the U.S. Senate Committee – Subcommittee on Competitiveness, Innovation, and Export Promotion, during which he made several excellent recommendations.  The proposed tax credit sounds like a close cousin to two of Rhys’ ideas:  tax credits for angel investors and matching local grants to qualified SBIR/STTR grant recipients.

The ABJ also reports that the Austin Chamber of Commerce supports…

“loosening rules that prohibit businesses owned 50 percent or more by a VC firm from applying for SBIR grants because such changes would improve the quality of applications.”

These measures would represent a modest start, but we are pleased to see the growing awareness and encourage everyone involved in the early stage entrepreneurial culture throughout the Southeast and Texas to echo these points to our state and national legislators and regulators as often as possible as we debate how to ignite renewed economic growth in America.

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