Texas has discovered the formula for economic growth

Joseph Nixon Contributor
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Amid huge corporate losses, massive job layoffs, government bailouts, unsustainable national deficit spending, state bonds rated as junk and discussions of states filing for bankruptcy, Texas stands out as a shining example of economic stability and growth.

Since the recession bottomed out, 37 percent of all new jobs in the United States have been created in Texas, even though the number of  government jobs in Texas has declined by 1.1 percent in the last year.

During the recently concluded legislative session, Texas also reduced taxes for 40,000 small businesses.

How in the world can a state help create 45 percent of all new non-farm jobs, balance a budget, cut taxes and dramatically expand world-renowned medical centers in these tough economic times? Professors at the London School of Economics may not teach this simple formula, but it works:

Right-to-work laws, low taxes and fair courts.

In Texas, we provide citizens with the right to work regardless of whether they’re union members. They may join unions if they choose, but most do not.

Of course, people can only work if there are jobs available, but Texas has that covered too. From November 2007 to November 2008, while the United States as a whole lost 1.3 million jobs, Texas added 250,000 jobs. Over the past 10 years, the state added 750,000 private-sector jobs. And we don’t just have jobs for Texans; we also have jobs for people who want to become Texans. Texas added more than 4 million people this decade while still keeping unemployment almost 2 percent below the national average.

We have been able to do this because low, stable taxes invite the investment of capital in Texas. The Lone Star State is now the proud home to many Fortune 100, 500 and 1000 companies, yet it is not the big companies that are keeping Texans employed; 85 percent of Texans work for small businesses.

People who choose to start a business in Texas or relocate a business to Texas have done their research on taxes. Site location consultants report that Texas has the 11th lowest tax burden in the country, the lowest tax burden of any of the major states and a tax structure that is simple, clear and easy to predict. Job and economic growth follow capital investment, and capital investment follows low, stable taxes.

Our judicial system has also become known as one of the fairest in the country. In 2003, in a major bipartisan effort, the Texas Legislature sought to bring into balance laws which previously gave plaintiffs an unfair advantage. In the eight years since its major lawsuit reform effort, Texas has seen unprecedented growth in the number of physicians, capital investment in hospitals and medical facilities, improvement in health care and growth in general business.

When you consider both the health care and the economic effects of gaining 23,000 physicians, $7 billion of investment in new medical infrastructure and $1.2 billion of additional charity medical care in the past two years alone while increasing the number of Texans with health insurance by almost 500,000 — all as a direct result of lawsuit reform legislation — one can appreciate the significance of fair courts and balanced laws in attracting and retaining jobs and entrepreneurs as well as keeping Texans physically healthy.

What’s more, the Texas Legislature just passed a “loser pays” bill to discourage the filing of frivolous lawsuits. If a judge says a plaintiff has no case at the outset, that judge can award the defendant his costs of defense against the plaintiff and his lawyer.

With other states in economic decline, it is amazing that the formula for economic success is not discussed more: support the right to work, keep taxes as low as possible and establish fair courts and just laws. And don’t mess with Texas.

Joseph M. Nixon is of counsel with Beirne, Maynard & Parsons, LLP and is also a Senior Fellow with the Texas Public Policy Foundation. He served as state representative from 1995-2007, was Chairman of the House Committee on Civil Practices from 2003-2007, and was the author of the 2003 lawsuit and medical malpractice reform legislation.