Editorial: Time for Delaware to start thinking about more than taxes

Delaware Business Times Editor Jacob Owens

Earlier this month, Delaware leaders got a look at a new survey on who is interested in living here and what their motivations for moving might be. The results were pretty surprising.

While we love to tout our low taxes, including our lack of a sales tax, it appears those considering relocating are as interested, if not more so, in our natural resources.

Those interested parties aren’t just from neighboring states either, but really from all over the country. Surprisingly to many observers, California led the pack in the sheer number of survey respondents who said they were interested in moving to Delaware, totaling more than 800.

It wasn’t just the Golden State that stood out in the survey though, as Georgia, Texas, Illinois, and Florida all had hundreds of people who were reportedly interested in a First State life. Residents of other states like Arkansas, Alaska and West Virginia also expressed a high level of interest – perhaps raising the prospect of a marketing push in Little Rock or Anchorage?

For years, Delaware has marketed its comparatively low tax climate to those in neighboring or nearby states like Pennsylvania, Maryland, New Jersey, and New York. Frankly, that is and should continue to be a major selling point.

At 5.54%, Delaware ranked second lowest for tax burden, or the proportion of total personal income that residents pay toward state and local taxes, according to the 2020 State Tax Burden Study by WalletHub, a personal finance website.

Compare that to some of the states that we most often see traveling down Interstate 95 or Route 1. New York has the highest tax burden of any state at 12.28%, while New Jersey ranked seventh highest and Maryland 11th highest with both having burdens of more than 9%. Pennsylvania sits at the median 25th position with a burden of 8.53%, still considerably higher than the First State.

While California and Illinois rank in the Top 15 tax burdens, Georgia and Texas fall outside the Top 25. Florida meanwhile only ranks three places behind Delaware with a burden of 6.82%. All of that aligns with the narrative discovered by the surveying firm Dynata that taxes aren’t the overwhelmingly motivator we thought they might be.

The survey, which contacted 80,100 people outside of the state and 346 recently arrived Delawareans about their thoughts on the state, showed that outsiders have a more overall positive view of our state – a fact that isn’t necessarily surprising as many who are considering moving have a bit of “grass is greener” outlook on new destinations.

While Delawareans who have moved here cite lower taxes, favorable cost of living and the quality of life as highlights of the First State, outsiders care as much about those things as the state’s beaches, countryside and pace of life, the survey found.

Outsiders are far more likely to believe that it is easy to find a job in Delaware than current residents, and the quality of jobs and employers are better in the eyes of non-residents.

Those considering moving here also see Delaware as a good place to start a new business, with more than one in four saying it was opportune for entrepreneurs. Nearly 70% of residents see self-employment in Delaware as, or more, attractive here than in other states.

What should we take away from these findings?

First, we may want to reassess our feelings on our economic climate. If everyone else thinks it’s better to start and grow a business here than where they are, is there merit to that belief?

Stakeholders have begun to push Delaware to improve one of its biggest business challenges: its traditionally slow regulatory and permitting framework. The Ready in Six initiative pushed by the Delaware Business Roundtable, a consortium of state CEOs, would go a long way toward that goal.

Pieces of that push are approved through varied Carney administration initiatives, including the Transportation Infrastructure Investment Fund and a proposed laboratory development grant program. We’ve heard from several large project developers, including Amazon, that they don’t feel the state’s processes have slowed down their work – a positive first step. We need to make sure that we don’t lose sight of that goal amid the challenges of the COVID-19 pandemic though.

The second takeaway should be that Delaware can broaden its view of potential marketing bases, putting an emphasis on its beaches, parks and available rural lifestyle. Love the Southern California beach lifestyle? Get it in Southern Delaware with half the taxes. If you like the Windy City, wait until you see the First State’s open spaces.

While Delaware has seen a big influx of retiree residents in recent years, especially in Sussex County near its beaches, the survey also found that midlife and young professionals were interested in Delaware as a home. Those younger demographics are a big opportunity because they are likely to invest and stay longer in the state.

Gary Laben, CEO of the pollster Dynata, called the findings a “jump-on-it moment.”

I agree. 

Jacob Owens, Editor

jowens@delawarebusinesstimes.com