With its small size, lack of natural resources, and proximity to 2 large cities, Connecticut has a lot of disadvantages in today’s modern economy. Businesses in today’s world that aren’t involved in extraction industries or don’t need to be near a port or other stationary feature can place themselves anywhere they want. With a technology based business, there is less of a need to be anywhere specific. With modern technology, businesses and their employees can be connected from anywhere, so it’s easy to pick a new home for your company based on cheaper taxes, lower wages, or whatever else a company is looking for.
This makes it hard for small, highly populated states like Connecticut to keep businesses in the state without offering tax cuts. These tax cuts may work to preserve jobs, but the state doesn’t generate any revenue from the business. That puts more tax pressure on residents, making the state even more expensive to live in. Plus, if one business gets a tax break for staying in the state, other businesses may threaten to leave unless they get their own tax break. A similar example would be modern NFL team owners, who threaten to pack up and leave unless taxpayers build a new stadium for them.
It’s a hard problem to solve, but I was trying to think of a way around the problem of keeping businesses in the state. Here’s my idea–Rather than try to grab and keep any type of business that threatens to leave, Connecticut should target niche businesses and offer tax breaks or subsidies to lure them in or retain them in the state. For instance, maybe there’s a small specialty Industry that has 8-10 manufacturers nationwide. If you lure 6 or 7 of them to the state, a majority of the whole industry is now located in your state. Any future entrants to the industry would be motivated to locate their business in the state to be near to the talent pool and the other businesses and suppliers that support the industry. Universities and trade schools could also train workers in the specific industry, making it easy for the businesses to find qualified workers.
Maybe it’s an oversimplification of a problem, but I think if the Connecticut developed a better plan to target and retain specific industries, it would help get the state on more solid financial footing, and give more confidence to residents that Connecticut is a good place to live and work.