2/28/2005

California Is Not Business-friendly

The top ten most business-friendly states this year in regards to tax policies were South Dakota, Florida, Alaska, Texas, New Hampshire, Nevada, Wyoming, Colorado, Washington, and Oregon. Several of these states happen to be California's neighbors. California ranked a low 38th in this list, putting that state at a huge disadvantage with just about every state in the western United States. The main reason for this is California's gigantic 8.8 percent corporate income tax which is the highest in the western region of the country. Short-term tax lures are a good ploy for political figures to attempt to "create" jobs. But what really needs to be done is California's tax codes must be changed to be permanently business-friendly to both existing and new-coming employers. Can you really blame California companies for taking their businesses elsewhere? Why stay in a tax crazy state when you could save twice the amount on taxes in the neighboring state? Maybe somebody should recommend to the terminator that he create a more neutral tax code before every business flees the unfriendly state.

7 comments:

Drake said...
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Drake said...

Arnold may be back, but the businesses won't. Maybe that could be a good thing for people in the state of Utah. Hopefully the large companies that do flee California’s high tax unfriendliness, would feel that they could be more successful in the state of Utah where land is cheap and taxes are somewhat better. That would be a great way to boost our state economy, and an even better way to bring more, higher paying jobs to a state that needs them more than California.

Harry said...

Well first of all do you really think that businesses are just going to start fleeing to another state where taxes are more reasonable. They might but, one thing about California is that people already know how expensive it is so they will expect it. Who knows businesses just might flee if they can see a better business with lower taxes.

t0m said...

Makes you wonder why California is the world's fifth largest economy, while it's "business-friendly" neighbors are not.

But you're basing this on a "prediction" of business exodus, rather than the reality. California is beating expectations, and Wyoming isn't going to open its own silicon valley anytime soon.

Meanwhile, just keep thanking us for providing the lions share of federal taxes to states like Wyoming who take more federal money than they contribute. I hope Cheney's neighbors enjoy the anti-terrorism money they took from California.

t0m said...

I suppose the real question is whether businesses are willing to pay extra to have world-class infrastructure at their disposal. In this high-tech economy, the answer is usually yes.

By the pure tax-policy standard, one could easily say Saudi Arabia is more business-friendly than any state, but I wouldn't recommend moving corporate headquarters there.

The Deeya and Rohit Adventure said...

What is the source of this ranking?

Dr. Tufte said...

-1 on Jones post for no link.

There is a whole set of tradeoffs beyond taxes that make a state competitive. So, the comments are poorly focused.

Part of the point of this sort of study is to balance all of those other things, and on that overall count California does poorly.

But, to go back to tradeoffs, California may be able to afford to be that way. California has a lot of fixed resources which draw people and businesses in: good weather, good ports, airfields, and rail links, good universities, a pretty coastline, and thick markets. It probabably shouldn't be a surprise to anyone that a state that has all of those can also afford to by unsympathetic towards businesses. The intermountain states have to be business friendly because most people don't want to live here.