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A new survey released today by Thumbtack.com gives more evidence that reforming regulations for new and small businesses at the state and local level could lead to valuable economic gains.

The survey, which assessed how “friendly” states and local areas were to new and small businesses, finds that those states with the friendliest climates had fewer licensing regulations and other legal hurdles that hindered business registration. In fact, the survey found small businesses viewed licensing requirements as almost twice as important as tax rates in determining how friendly a state was to its businesses. And states deemed the most friendly to business, including Texas, Idaho, and Oklahoma, were also the states where respondents claimed starting a new business was easy.

The survey, which received over 6,000 responses from small businesses across the country, was conducted by Thumbtack.com in partnership with the Kauffman Foundation. It found Texas was the friendliest state in the nation for small businesses, while California was ranked as the least friendly.

Small businesses are a crucial backbone to the U.S. economy, employing almost half of all American workers. That’s why it’s important to implement business regulations and policies that make establishing a new business a relatively smooth process. States that have excessive or redundant regulatory processes could be discouraging an important source of economic growth, or lose out on business opportunities to a more friendly state. And with those lost business ventures comes lost spillover effects to the local economy that are an important source of state and local revenue.

PPI has long advocated for reducing unnecessary regulatory hurdles, to encourage the development of new innovations and facilitate getting those innovations to market quickly and efficiently. That’s why PPI proposed a Regulatory Improvement Commission, a congressionally authorized body designed to reduce and remove unnecessary Federal regulations as submitted by the public, as part of our Regulatory Reform Initiative.

Given how many states have “unfriendly” regulations, emulating such a Commission at the state level could certainly have a significant impact on creating friendlier business climates. And given the slow economic recovery, it’s as important as ever policymakers at all levels of government work to balance consumer safety and business legitimacy with creating a more conducive climate for small and new businesses.

Photo credit: marsmet526