Here we are in Orange County, arguably one of the most economically blessed and most desirable places on the planet. Where else can you get the desert, the mountains, the ocean, beautiful year round weather, the Angels and Disneyland? Yet you read that business after business is moving out of state. Explain to me why someone would choose the Arizona or Nevada desert over California?
Could it be the high taxes?
Nevada and Texas have no personal income tax, and Arizona’s top rate is 4.54% compared to California’s 13.3% thanks to prop 30. Corporate taxes are high as well. Corporations that have earned money offshore, keep it offshore, because, if they “repatriate” the money they will have to pay taxes on it.
Look at Google, one of those liberal bay area tech companies, whose executive Chairman, Eric Schmidt, personally contributed over $100k to Obama and the DNC. Google is legally “shielding” (or, if you use “Obama-speak,” it is a corporate “loophole”) nearly $10 billion of Google money in Bermuda in order to avoid over $2 billion in worldwide taxes. So even if Schmidt isn’t leaving California, his money is.
Maybe it is the hidden taxes of regulation that is causing the business exodus?
Regulation is a hidden tax. Regulation makes things more expensive, usually requiring all to pay.
Carl’s Junior, a true Orange County based business, decided several years ago to build new restaurants in Texas rather than in California. Why? California’s Land Use Regulations cost Carl’s $2 million and 2 years to open a new restaurant here in California versus Texas, where it is open for less than half that cost in 6 to 9 months.
Put another way, Carl’s can open twice as many restaurants in Texas versus California for the same money. Any guess on what happens to revenue with twice as many restaurants? Let’s see…..twice the revenue for the same dollar investment. I am only an architect and even I can do that math.
California regulations are getting worse, not better.
The legislature requires utilities to get 1/3 of their power from renewable sources like solar and wind (not hydroelectric) which makes electricity in the Golden State more than 50% more golden, I mean expensive, than the rest of the country.
And new requirements for AB 32, the Global Warming Solutions Act of 2006, continue to require more expensive efforts to reduce greenhouse gases (GHG), based on proven, bogus science. To build a new house today, you must prove that you are not contributing to greenhouse gases or mitigate your GHG with carbon off sets. This doesn’t even get into the carbon credits scenario where businesses will be forced to purchase carbon credits (read “taxes”) for those greenhouse gases they cannot mitigate on their own.
So if you are an international company selling widgets, why add to the costs of those widgets by having California costs, when you can go to Texas and produce the widgets at a fraction of the cost? And if you don’t have the brains to move, then your competitors will take your market share and you will be out of business.
What happens when all the jobs leave? The whole state becomes a retirement community where those of us that have what we have earned and are not earning income anymore can afford to stay. The only jobs will be those that serve the retirement community. Young families are the ones that can least afford California and the jobs are fewer for this age group. And it is easy to move.
Will the last business to leave California please turn out the lights when you leave? We wouldn’t want to waste any green energy.
Any questions, feel free to contact me at [email protected].