Caterpillar, one of the nation’s largest construction equipment manufacturers, is relocating its headquarters from Deerfield, Illinois, to Irving, Texas. The announcement came after the state received recognition for being home to 54 Fortune 500 companies, the most in the country.
Within the last several years, Tesla, Oracle, and Hewlett Packard Enterprise have made similar moves.
“I’m glad to see Caterpillar is moving to Texas,” said Vince Ginn, an economist at Texas Public Policy Foundation, a conservative think tank.
Ginn said corporations and employees benefit from the move.
“We’re one of only nine states and do not have a personal income tax, which is huge. You have a franchise tax on business, but it’s relatively low,” Ginn said. “We also have a highly-educated workforce.”
Some experts say Texas is in a centralized location, the climate is consistent, and housing costs are great selling points for executives. In addition, companies have taken advantage of a property tax incentive known as the Texas Economic Development Act or Chapter 313.
The law, set to expire at the end of the year, gives companies substantial tax breaks.
In 2021, Elon Musk built a gigafactory and relocated Tesla’s headquarters from Silicon Valley to Austin.
“Chapter 313, which is done by the independent school districts, gives a kind of tax abatement, a tax reduction over a certain number of years to reduce that property tax liability,” Ginn said.
However, Ginn said Caterpillar is not benefiting from any subsidies for its move, which is why he argues they aren’t needed.
“We don’t need tax incentives to bring businesses to Texas,” Ginn said. “Businesses are already going to move here. That’s what the research in this area, this space shows.”
According to the Texas Comptroller’s Office, 503 companies have active agreements and benefit from Chapter 313.
