Commentary: Economic development sales tax has added 1.2 million Texas jobs

Economic DevelopmentĀ 

By M. Ray Perryman

Texas has been one of the strongest performing states in the U.S. for a number of years, attracting more major corporate locations and expansions than any other and regularly topping lists of the best places to do business.

As examples, the state has won the “Governor’s Cup” for the most major projects for the past eight consecutive years and was recently named the “State of the Decade” by Site Selection magazine.

M. Ray Perryman

A major reason for this success is the local-option sales tax for economic development, which has been crucial to proactive efforts for over 30 years. The more than 700 economic development corporations (EDCs) in communities of all sizes utilize these funds for a variety of purposes which enhance prosperity and have generated substantial increases in business activity and jobs.

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It represents the first major public investment in Texas job creation, and it remains by far the largest single source of resources allowing Texas to compete with other states and areas around the globe for economic activity.

We recently estimated the economic benefits of projects facilitated by the sales tax for economic development. (The full report, including results by industry and some specific examples from communities across the state, is available free on our website at

We found that over 20% of net new jobs generated in Texas in the past 30 years have in some way involved efforts supported by the economic development sales tax.

These projects have also led to multiplier effects across all aspects of business activity, and we estimate that the total economic benefits include more than $110.1 billion in annual gross product and almost 1.2 million jobs. These benefits are spread across industries and positively affect communities large and small throughout the state.

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This huge economic stimulus also generates tax receipts through increasing retail sales, enhancing the property tax base and therefore property taxes, and other channels.

We estimate that the fiscal benefits to the State of Texas from projects facilitated by the sales tax for economic development include $7.1 billion per year, with $4.9 billion per year to local taxing entities across the state (cities, counties, school districts, and special districts).

The return on taxpayer investments is substantial, with every dollar of economic development sales tax revenues bringing $8.49 to the state and $5.87 to local taxing authorities.

The sales tax for economic development has long been an indispensable asset in keeping Texas at the forefront of desirable corporate location activity.

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Future prosperity of communities across Texas and the state as a whole has been greatly enhanced by the resources provided by the tax, and, in the post-COVID-19 environment, such resources will only become more crucial to success.

M. Ray Perryman, Ph.D., is president and Chief Executive Officer of The Perryman Group (, which has served the needs of more than 2,500 clients over the past four decades.