Joseph Vranich, president of site selection consultants Spectrum Location Solutions (VLS) in Irvine, found that roughly 9,000 California companies moved their headquarters or diverted projects to out-of-state locations in the last seven years due to the Golden State’s “hostile” business environment.
Vranich reports that the bitter negative perceptions of California for business began during Jerry Brown’s first chaotic two terms as California Governor from 1975 to 1983. Things got so bad that the Governor instructed his aides in 1977 to begin wearing “California Means Business” buttons.
According to the Wall Street Journal, Brown tried to convince reporters on a late 1970s junket to Japan that “Our economic climate is very good.” He added, “I think this is dissipating a good deal of the political rhetoric surrounding the business-climate talk.”
VLS points out that despite the growing anti-business environment, California’s economy grew for the next three decades due to wonderful scenery and climate, a workforce with technical expertise, and trade access to Asian nations.
But since the start of the Great Recession and accelerating after Brown’s election as governor in 2009, a mass exodus of businesses from the not-so-Golden State to more “friendly” locations occurred.
Vranich told the Dallas Business Journal that companies that are leaving California to escape escalating costs and regulations can move to Texas or Nevada that have no income tax and high relative purchasing power. According to Vranich, “I even wonder if some kind of ‘business migration history’ has been made.”
VLS estimates that many former California companies that moved to more business-friendly locals have experienced “astonishing” operating cost savings of 20 up to 35 percent.
These are tax rates currently imposed on California residents.
The maximum rate for individuals is 12.3%
Corporations other than banks and financials 8.84%
Banks and financials 10.84%
Sales taxes – range from 7.25% to near 10%
Current California fuel tax policy, coupled with other California specific policies and circumstances, directly results in California having the highest fuel prices in the nation. California boasts one of the nation’s highest combined (federal, state, local) gasoline taxes, 28% higher than the national average. California state gasoline taxes alone are 43 percent higher than the national average of state gasoline taxes. Californians pay both the excise tax on gas and the sales tax as well.
Despite these excessive tax rates, California is in serious debt.
A study compiles information on California’s state and local government debt, relying primarily on official reports prepared by the State Controller and State Treasurer. When, along with the $27.8 billion “Wall of Debt,” long-term debt incurred by California’s state, county, and city governments, along with school districts, redevelopment agencies and special districts are totaled, the outstanding balance is $383.0 billion. The officially recognized unfunded liability for California’s public employee retirement benefits – pensions and retirement health care – adds another $265.1 billion. Applying a potentially more realistic 5.5% discount rate to calculate the unfunded pension liability adds an additional $200.3 billion. All of these outstanding debts combined total $848.4 billion. The study also shows that by extrapolating from available data that is either outdated or incomplete, and using a 4.5% discount rate to calculate the unfunded pension liability, the estimated total debt soars to over $1.1 trillion.
Business leaders across America understand the hatred Marxist/Progressives have for business.
It must be rainbows, butterflies and unicorns for Sacramento liberals, as California successfully defended its crown as America’s CEOs again named California the worst state to do business–for the eleventh straight year.
Business leaders highlight California state and local government officials’ negative attitudes toward business. CEOs blamed the cost of trying to comply with the state’s “capricious” regulatory system, calling it a job killer, especially for “smaller firms that are the least able to bear the costs.”
And yet Sacramento continues to tax and regulate just like all good Marxist/Progressives do. California is following the same path as did the Soviet Bloc, Mao’s China, Castro’s Cuba, and now Venezuela. These Marxist/Progressive experiments are vivid and real prognosticators of California’s future.