In 2011, more businesses (254) quit California than the year before (202), which was a high-water mark over 2009 (51). Last year, roughly five businesses left in any given week, one more than left in each week of 2010 when the average was 3.9.
At one time, California was truly the land of opportunity. But the business climate has turned hostile.
According to Jon Coupal, president of the Howard Jarvis Taxpayers Association, and John Kabateck, executive director of the National Federation of Independent Businesses, the state's business tax climate is the second worst in the nation. The corporate income tax rate is 8.84%, the highest west of the Mississippi and eighth highest in the country.
California's income tax, which is the tax many small-business owners pay, is the nation's third highest; the 9.3% rate kicks in at $46,349 in annual income for those who file as individuals, and the 10.3% rate applies to income over $1 million a year.
Then there's the highest sales tax (7.25%, plus local levies in some areas) in the country, the fourth-highest capital gains tax (9.3%) and the second-highest gasoline tax (an average of 65 cents a gallon).
There's also the vicious regulatory environment that businesses have to negotiate.
"California's anti-business climate is worse than ever because many politicians are making a career out of treating businesses as an object of scorn vs. a resource to be appreciated," says Joe Vranich, an Orange County relocation expert who tracks business movement out of the state and provided the exit numbers cited above.
The benefit of leaving California is immense. Vranich says businesses save 20% to 40% a year in costs after their out-of-state moves are completed.
One company executive who left told Vranich that "we compete globally and we can't compete with California's costs." Another told him that California "is the worst state in the country to do business in. . .. There doesn't seem be any improvement on the horizon."
The root of the problem can be traced to 1974 when voters elected current California Gov. Jerry Brown to that office. It was during Brown's first term that his "administration proceeded to scuttle some infrastructure spending, limit development and expand environmental regulations," Steven Malanga wrote in the autumn issue of the Manhattan Institute's City Journal.
Within four years, says Malanga, Fantus Co., a corporate-relocation firm, ranked California the fourth worst state for business.
The trend was reversed under Republican Govs. George Deukmejian and Pete Wilson. But the anti-business climate returned in 1999 under Gov. Gray Davis, Brown's chief of staff in the late 1970s. Malanga reports that Davis "signed 33 bills that the state's chamber of commerce called 'job killers.'"
Davis was recalled by the voters, but his old boss Brown is back in the governor's mansion. One would think he'd be wiser, but that appears to be asking too much. He has signed a law that requires power providers to produce one-third of the state's energy from renewable sources by 2020, keeps pushing the high-speed rail boondoggle, follows the environmentalists' agenda and is in the pocket of public-sector unions — all of which heap more costs onto business.
Though in decline, California isn't dead. If it were a country, it would still be the eighth largest economy in the world. But it is the sick man of America.
The political class can't stop taxing, spending, regulating and harassing business. Until the attitude is changed, the number of companies that give up, check out and leave will just keep growing.
http://news.investors.com/article/604210/201203131827/california-drives-out-more-businesses.htm?p=2
At one time, California was truly the land of opportunity. But the business climate has turned hostile.
According to Jon Coupal, president of the Howard Jarvis Taxpayers Association, and John Kabateck, executive director of the National Federation of Independent Businesses, the state's business tax climate is the second worst in the nation. The corporate income tax rate is 8.84%, the highest west of the Mississippi and eighth highest in the country.
California's income tax, which is the tax many small-business owners pay, is the nation's third highest; the 9.3% rate kicks in at $46,349 in annual income for those who file as individuals, and the 10.3% rate applies to income over $1 million a year.
Then there's the highest sales tax (7.25%, plus local levies in some areas) in the country, the fourth-highest capital gains tax (9.3%) and the second-highest gasoline tax (an average of 65 cents a gallon).
There's also the vicious regulatory environment that businesses have to negotiate.
"California's anti-business climate is worse than ever because many politicians are making a career out of treating businesses as an object of scorn vs. a resource to be appreciated," says Joe Vranich, an Orange County relocation expert who tracks business movement out of the state and provided the exit numbers cited above.
"Hence, we see efforts to increase taxes, regulations, fines and fees on businesses."
One company executive who left told Vranich that "we compete globally and we can't compete with California's costs." Another told him that California "is the worst state in the country to do business in. . .. There doesn't seem be any improvement on the horizon."
The root of the problem can be traced to 1974 when voters elected current California Gov. Jerry Brown to that office. It was during Brown's first term that his "administration proceeded to scuttle some infrastructure spending, limit development and expand environmental regulations," Steven Malanga wrote in the autumn issue of the Manhattan Institute's City Journal.
Within four years, says Malanga, Fantus Co., a corporate-relocation firm, ranked California the fourth worst state for business.
The trend was reversed under Republican Govs. George Deukmejian and Pete Wilson. But the anti-business climate returned in 1999 under Gov. Gray Davis, Brown's chief of staff in the late 1970s. Malanga reports that Davis "signed 33 bills that the state's chamber of commerce called 'job killers.'"
Davis was recalled by the voters, but his old boss Brown is back in the governor's mansion. One would think he'd be wiser, but that appears to be asking too much. He has signed a law that requires power providers to produce one-third of the state's energy from renewable sources by 2020, keeps pushing the high-speed rail boondoggle, follows the environmentalists' agenda and is in the pocket of public-sector unions — all of which heap more costs onto business.
Though in decline, California isn't dead. If it were a country, it would still be the eighth largest economy in the world. But it is the sick man of America.
The political class can't stop taxing, spending, regulating and harassing business. Until the attitude is changed, the number of companies that give up, check out and leave will just keep growing.
http://news.investors.com/article/604210/201203131827/california-drives-out-more-businesses.htm?p=2
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