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A widening gap between heavily regulated states and those with lighter rules is increasingly shaping where businesses choose to operate, as compliance costs and administrative hurdles weigh on growth.
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FOX Business’ Madison Alworth joined FOX Business’ Stuart Varney on “Varney & Co.” to report on how regulatory burdens are influencing economic decisions across the country.
Recent data from the Cato Institute highlights how states like New Jersey, California and New York rank among the most restrictive, while states in the Midwest and Plains regions offer more business-friendly environments. That divide is becoming more pronounced as companies gain flexibility to relocate operations.
For some business owners, the pressure is immediate. Outer Realm CEO Dhara Patel, who previously ran a virtual real estate touring company in New York City, described the toll of constant compliance demands.
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“I swear, sometimes I don’t sleep because I’m like… Did I do this? Did I submit this paperwork?… It’s exhausting when they’re adding new compliance, that new annual report that they’re requiring,” Patel said.
She ultimately moved her business to Florida, citing both regulatory complexity and tax savings as key factors.
“New York made it so complicated, the amount of reports that you have to file, the new paperwork and everything like that,” she said.
Economists say the broader impact extends beyond individual firms. Regulation can function as an added cost to businesses, limiting time and resources that would otherwise go toward expansion.
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“Regulation is like a tax. It’s a cost that businesses have to pay in order to do business in a state… More regulation means slower growth,” expert John Lonski said.
He added that higher regulatory burdens tend to coincide with slower economic growth, as businesses and workers gravitate toward less restrictive environments.
The contrast underscores how regulatory environments are increasingly shaping where businesses choose to operate and grow.
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