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Midwest Closes a Cost Gap

Wall Street Journal (05/21/12) Conor Dougherty

An index compiled by Moody’s Analytics shows that business costs have fallen in most regions in recent years. The South has traditionally been the least expensive region for businesses, at 95% of the U.S. average in 2010, but only the Midwest has narrowed the cost gap, with costs accounting for 96% of the average in 2010. The South has been successful in drawing manufacturers and other companies from the northern states and attracting factories established by foreign companies due to business-friendly laws and the absence of widespread unionization, but the Midwest is better able to compete as a result of tax incentives that aim to attract and retain firms. These include long-term property tax abatements, corporate income-tax credits, and sales-tax exemptions for machinery and equipment.