America has voted, and New York will soon be run by a socialist

This is the biggest mistake European business owners make when dealing with America. They read American politics the way they read politics at home, from the top down. In the United States, it works differently.

Your company is formed under the law of a state. Your ongoing obligations, your annual report, your franchise tax and your Registered Agent are all tied to that state. Whether you charge sales tax, and how much, is decided by the state and often the city. Whether you pay property tax, and how much, is decided by the county.

The federal level handles income and corporate tax, immigration law and foreign trade. Important, but further from your day-to-day business than most people think.

A mayor in New York can't touch your federal taxes. He can, however, decide how expensive it is to run a storefront there, how high local levies are, how strictly rents are regulated and how friendly the city is to employers.

Let's stay level-headed, because a lot of breathless things are being written about this election. A mayor of New York City has considerable power over the city's administration, the police, schools, housing and city levies, to the extent state law allows.

What he can't do on his own: change New York State income tax. That takes Albany, meaning the governor and the state legislature. So if you see headlines about new taxes on the rich, check which level is meant. Between a campaign promise and a law passed in Albany, there are legislative terms.

For you as a European business owner, this means: if you're already based in New York, keep a close eye on the local level, especially anything involving commercial property and levies. If you're thinking about setting up there, today is a good day to ask the question again.

Here it is: which state should your company actually be in, and why?

A surprising number of Europeans answer with a name they've heard somewhere. Delaware, because everyone does it. Wyoming, because someone said so in a forum. California, because that's where the customers are.

The right answer comes from four questions. Where is your value actually created? Where do you have staff, a warehouse or an office, which is what US law calls nexus? How high are the state's franchise taxes and annual fees? And how easy is it to do business there, run bank accounts and hire people?

We've broken this down in Which state, which legal form and in The states we recommend. If you're wondering why Delaware has such a reputation in the first place, you'll find the honest answer in Why Delaware is so attractive, including the cases where it's the wrong choice.

I'm based in Austin, so take this with the appropriate grain of salt. But the reason so many European business owners have landed here in recent years has little to do with ideology and a lot to do with the numbers.

Texas has no state income tax. It has a business levy, the franchise tax, with a threshold below which the vast majority of small and mid-sized businesses simply pay nothing. In return, its property taxes are noticeable, and it has a job market where you can actually find people.

Then there's something harder to put a number on: this state doesn't treat entrepreneurship as something suspicious. If you come from Europe, you feel the difference in your first week.

The pros and cons are covered in Texas as a US location and Forming a company in Texas. And if you want to know what life here feels like, not just the balance sheet, read Is Austin the best city in the USA.

Over the years, this sorts itself out pretty clearly. There are three channels through which American politics reaches a European business, and they work at different speeds.

The fast channel is foreign trade. Tariffs, import restrictions, sanctions lists. These can take effect within days, they depend largely on the executive branch, and they hit anyone who moves goods across the border. If you import, watch this channel closely. Nothing about your business can change as quickly as the price at which your goods arrive at the border.

The medium channel is immigration law. It moves through regulations, proclamations and fees, so over months. If you bring employees over from Europe or need a status yourself, you'll notice changes a few months later, usually while an application is in progress.

The slow channel is tax law. It takes legislation, and legislation takes majorities in both chambers. That's why tax rates in the United States stay remarkably stable for long stretches and then change in big jumps when a package passes.

A change of mayor in New York affects none of these three channels. It affects a fourth one that's easy to overlook: the local climate. Rents, permits, inspections, how the administration treats businesses. For a shop in Brooklyn, that's crucial. For a Delaware company with customers all over America, it's irrelevant.

Take a realistic example. A German software company wants to enter the American market: three employees in the first year, customers spread across the country, no warehouse, no storefront.

In this case, New York versus Texas isn't a tax question, it's a staffing question. Where do I find people, what does it cost them to live there, and how much salary do I have to pay as a result? A developer in Manhattan costs many times what the same developer costs in Austin or Raleigh, and the difference comes not from taxes but from rent.

Only when substance comes into play, meaning warehouses, manufacturing, vehicles or real estate, does the tax question become big. Then property tax rates, business levies and the question of which states you owe sales tax in all matter. That's the nexus question, and for European e-commerce sellers it's regularly the most expensive surprise. Start with Nexus and sales tax.

Almost always the same thing: separate the news from the decision. An election night produces news by the hour and decisions next quarter at the earliest. Mix the two up and you make bad decisions at the wrong time.

In practice: if you're in the middle of forming a company, form it. If you're in the middle of reviewing your state, finish the review. If you've been hesitating for two years, no election in the world will help you make that decision, because your hesitation has nothing to do with America.

And if an election result genuinely worries you, ask yourself which part of your plan depends on exactly that level of government. Nine times out of ten, the honest answer is: none. In the one case where it does, you now know what to watch.

In Europe, American off-year and local elections are seen as a footnote. In fact, they're the best early indicator available of where this country is heading, because they take place a year before the big elections and are decided in states where majorities actually swing.

In November 2026, the entire House is up for election, plus a third of the Senate. What happened that night in Virginia and New Jersey is the first reading of a mood that will then become decisive. If you invest in America, you should know this calendar, not to speculate, but to know when major legislation is realistic and when it isn't.

And to understand something that often surprises Europeans: this country corrects itself constantly, loudly and in public. What looks like a break today is usually a swing. If you build here, build for the swings.

First: American politics swings. It swings faster and further than politics in Europe, and it swings on every level independently. Base your location decision on one election night and you're basing it on a snapshot.

Second: that's exactly why federalism is your friend. You're not at the mercy of one country; within one country you choose between fifty legal systems. If one no longer suits you, you can move your company. It's work, but it's possible, and it happens all the time here.

Third: don't let headlines push you into judging America as a whole. There is no single American tax climate. There are fifty, plus one at the federal level, and they differ from each other more than Germany does from Austria.

If you want to run the numbers on your location properly instead of answering the question from forums, talk to Mount Bonnell Advisors.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.