Incentives, Taxation & Cost of Living: Why Companies Are On the Move

12/08/2022

It’s no secret that the events of the last couple of years have dramatically changed how we all operate. We have shifted culturally in the workplace, we have had to make hard decisions in some cases, and in many cases, it’s growth time as consumer needs change.  As companies decide to make moves from one state to another, or startup operations for the very first time, they are making decisions with one major factor in mind – cost. 

Incentives

According to a recent report by the Site Selection Guild, local and state incentives remain very important to company’s site choices. 

It’s of no surprise to anyone that costs and incentives go hand in hand when evaluating a new location. Government at all levels along with utility partners’ willingness to welcome new business in their area are big factors when it comes time to make final decisions.  

South Western Kentucky’s pro-business climate provides a number of incentives for businesses. The Kentucky Economic Development Finance Authority established within the Cabinet for Economic Development to encourage economic development, business expansion, and job creation, provides financial support through an array of financial assistance and tax credit programs. Helping businesses in this way furthers the Commonwealth’s goals of achieving long-term economic growth and employment opportunities for its citizens.  A list with additional funding and incentive opportunities at the state level in South Western Kentucky can be found here. 

Locally it’s important to have collaboration between city and county governments to facilitate progress for major employers. Historically, SWK governmental bodies have evaluated opportunities and given incentives related to property taxes, employment taxes, as well as other city and county tax incentives to encourage a successful start to business in South Western Kentucky. 

For many companies relocating or expanding, the decision comes down to another cost factor - cost of living for their team. When relocating employees, quality of life is a factor, and cost of life goes hand in hand.  Here are three considerations to evaluate for your new location: 

Cost of housing - Housing in South Western Kentucky, for example, currently has a medium home price of $199,900 in the region which is well below the regional and national average.   Based on the wages your company will pay, will your team live comfortably in the location you’re considering? 

Taxes - Property taxes in South Western Kentucky are well below the national average, contributing to a low cost of living overall. And Kentucky has lowered its income tax over 1.5% and is working toward no state income tax. Additionally, things like grocery taxes and other local option taxes should be examined when calculating tax impact on residents. All of these tax rates will either add up or deduct to make a new site attractive or unattractive to its current and relocating residents. 

Education – While most areas have both public and private options for school-aged children, affordability of post-secondary is a major consideration for those living in and relocating to a new area.  Whether technical certifications or undergraduate degrees, factor in the cost of being work-ready.  An example of a consideration we see, many of South Western Kentucky’s residents take advantage of a free tuition program for post-secondary education. Paired with the lower cost of living, affordability long-term becomes a selling point for site selection here. How does education stack up in the areas you’re considering? 

Cost is a major factor when considering where to locate. Proximity plays a role when considering cost of components and potential downtime due to supply chain disruptions, but this time we’re talking cost of establishing your business and cost of maintaining employee lifestyles.  Head over to our website to see more resources & things to consider when expanding your company.