TEXAS VS CALIFORNIA: Which State Really Has The Better Economy?


We recently told you the story of why Vegas-based robotics startup Romotive is moving to California.

The gist of their reasoning was that while they knew they’d be paying more in taxes, but that they’d be in closer proximity to like-minded firms and entrepreneurs, as well as investors.

We were interested by their story in the first place, though, because California’s business climate has received some bad press this year.

And the state most responsible for giving it? 


It started with Gov. Rick Perry’s move to run advertisements in the Golden State touting Texas’ more favourable tax and regulatory environment. 

This was followed, among other things, by an op-ed from the Texas Public Policy Foundation “dispelling” myths about Texas’ disadvantages versus California.

The TPPF’s mission, in case you didn’t know, is to “promote and defend liberty, personal responsibility, and free enterprise in Texas.”

So arguably they may not be the most partial arbiter of the question. 

So we have taken it on ourselves to be so.

We looked at five broad categories — taxes, health, education, housing, and sports and leisure — to determine which state is superior. 

We took the perspective of a business executive or family trying to determine which of the two states is for them.

It comes down to the wire.

But the winner makes a convincing case.

Ding! Round 1: who's got lower tax rates?

Texas doesn't even have an income tax.

Texas does have a form of corporate income taxes, but they're way low.

Gas levies are cheaper in Texas...

And so is gas overall.

Know what else is cheaper in Texas? Booze.

Texas actually has a substantial sales tax, but it's still lower than California's.

Finally, and surprisingly, California's property taxes are lower than Texas'.

But Texas is the clear winner in this category.

Let's move on to education.

Education Week is not bullish on any of America's K-12 school systems, but Texas' comes out slightly ahead.

However, California gets better SAT scores (though fewer people there take it).

California trounces Texas in college graduation rates.

And there are many more kids in California enrolled in child care programs.

California is the clear winner for education.

Next, health characteristics.

California has a much lower mortality rate than Texas.

California also has a lower obesity rate.

But health care is cheaper in Texas.

Still, winner in health: California.

And now, housing.

It's cheaper to rent in Texas.

It's also cheaper to buy,

And there are fewer towns with unaffordable homes in Texas.

Texas wins housing in a sweep.

Finally, let's look at intangibles.

California has more national parks per capita than Texas.

California also has more pro sports titles per capita than Texas.

And perhaps much to the chagrin of the Lonestar State, California also has more college banners per capita.

So there you have it: having won 3 of 5 categories, California is the best place to raise a family.

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