Sadly, this is no surprise. But it’s it’s still news worth considering (every year, apparently).
In its annually updated study released today, the Tax Foundation STILL ranks California the third worst “business tax climate” state in the U.S. Thank Goodness for New Jersey and anchor-clanker New York.
http://taxfoundation.org/article/2014-state-business-tax-climate-index
Comments 6
It still blows my mind that since 2005 California’s GSP has consistently been $600B larger than Texas’s despite the the difference in business climates, employment, and economic growth.
My best guess is that if Texas and California had the same weather they would have blown us away a long time ago. We still donate a lot in federal taxes that we don’t receive back. Any other guesses why California (and #3 NY even) tops the list in economic size despite the business climate?
Response from the Left –
California’s not the worst state to do business in.
Elliott Schroeder — good questions. Most important, a state’s current economic output is largely dependent on PAST decades’ growth. CA has had a GREAT run. So has NY. NYC is particularly fortunate in that it’s hard to pick up an entire financial industry and move it — it’s a highly interdependent enterprise.
When comparing TX and CA, remember the current population differences — CA has about 30% more people. BTW, expect TX to start to show significant GSP increases, as its oil production has almost DOUBLED in the last four years.
Here’s a key metric concerning TX and CA:
According to recent U.S. census figures, the 2009 median household income in California is significantly higher than Texas.
CA — $58,931
TX — $48,259 — 18.1% less than CA
But, ADJUSTED FOR THE COST OF LIVING, the Texas median household income is significantly higher than California.
TX — $53,009
CA — $44,456 — 16.1% less than TX
http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Median_income
Elliott,
Two possibilities:
1. It takes a long time for bad political decisions and anti-business policies to have an effect on the economy and we are still benefiting from the effects of the policies enacted back in the day when Republicans controlled Sacramento, or
2. The “business climate” is determined by more than the tax rate.
Pick the one that makes you feel better.
HQ, I certainly agree that the business climate consists of much more than just taxes. But then, this is the “Business TAX Climate” index.
Of course, this state is EXTREMELY anti-business. Yesterday I was at a seminar where truckers are appalled that most current CA diesel trucks will not be “street legal” come one January, and cost $20,000 each to modify. Many small truckers will simply go out of business. It will be an interesting time.
But let’s look at another index — America’s CEO’s estimate of which state has the worst business climate (weighing in other factors):
736 top U.S. CEO’s surveyed rank California “the worst state in which to do business” for the 9th straight year (May, 2013). http://chiefexecutive.net/best-worst-states-for-business-2013
A few other factors relating to our business-friendly Golden State:
California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Oregon at $150. A few others under $100, with most at zero.
http://tinyurl.com/CA-800-tax
California small businesses failed in 2011 at a rate 69% higher than the national average — the worst state in the nation.
http://money.cnn.com/2011/05/19/smallbusiness/small_business_state_failure_rates/index.htm (based on Dunn & Bradstreet study)
In 2012, our supply of California businesses shrunk 5.2%. In ONE year. NOTE: That’s a NET figure – 5.2% fewer businesses in CA in 2012 than were here in 2011. Indeed, in 2012, CA lost businesses at a 67.7% higher rate than the 2nd worst state! http://riderrants.blogspot.com/2013/07/in-2012-ca-lost-businesses-at-677.html