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The Best States to Start a Business

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The Lone Star state continues to rank as the best place in the country to conduct business, according to a new poll.

For the eighth year in a row, CEOs rated Texas as the top state for businesses, according to Chief Executive magazine’s annual Best & Worst States Survey.

Rankings were compiled based on a number of factors, including regulations, tax policies, workforce quality, educational resources, quality of living and infrastructure.

"Local economic development corporations, as well as the state Texas Enterprise Fund, are providing attractive incentives," said J.P. Donlon, editor-in-chief of Chief Executive magazine and ChiefExecutive.net. "This, along with the relaxed regulatory environment and supportive State Department of Commerce, adds up to a favorable climate for business."

Florida ranked second in the survey, with North Carolina, Tennessee and Indiana rounding out the top five.

On the flip side, CEOs rated California as the worst state for business due to its high state taxes and overly stringent regulations, which is driving investment, companies and jobs to other states. According to Spectrum Locations Consultants, 254 California companies moved at least some of their work and jobs out of state in 2011 – five times as many as in 2009 and a 26 percent increase from last year.

"CEOs tell us that California seems to be doing everything possible to drive business from the state," Donlon said. "Texas, by contrast, has been welcoming companies and entrepreneurs, particularly in the high-tech arena."

Among the other states at the bottom of the rankings are New York, Illinois, Massachusetts and Michigan.

Inhospitable business environments mean fewer jobs, as entrepreneurs and established corporations seek more cost-efficient and tax-friendly locales, according to Marshall Cooper, CEO of Chief Executive magazine and ChiefExecutive.net.

"This survey shows that states that create policies and incentives are rewarded with investment, jobs and greater overall economic activity," Cooper said.

Louisiana was the biggest gainer in the survey, rising 14 spots to the 13th most attractive state in the country to do business. Oregon was the largest loser, dropping nine spots to No. 42.

The survey was based on surveys of 650 CEOs from across the country.

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