Would the Last Business to Leave Please Turn Out the Lights

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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]

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6 COMMENTS

  1. You’ve hit the nail right on the head. In the last three years I’ve had our clients moving out of state, the latest our engineering firm we use is in Vegas now and happy! Not only businesses but some of the best and most productive people I know have relocated out of state. Just had one more friend and her husband announce last week they are moving to Texas. And the regulations you mention, it’s ridiculous and getting worse every year.

  2. Scott – This all started back when God allowed humans to have domain over, or I should say in, His creation. First the dinosaurs came, then the politicians, then the California liberals (and many other liberals form the east hat like regulation). See there is proof positive for evolution. What you fail to realize is the agenda of the left coast liberals is to give the vacated land back. Not to the native Americans, or Mexico, but to mother earth. After the liberals have their alleged short lived utopia of nothing but nature to admire, the state will crumble. After most people have been driven out of the state, and there is no money to support it all state park lands will close, etc. Soon there will only be a couple main corridors to the National Parks, all else will revert back to nature as it was before those horrible people moved in to the golden state of dysfunction.

    Just think how great it would be if the state were off limits to all people and only the wild life could have free reign in here. No one would see it, ruin it, or know how the animals etc, are doing. But that’s ok, we shouldn’t be here anyway.

    By the way, I really like Arizona, Nevada, and Texas. They aren’t California, but they each has their own unique beauty and lower taxes.

  3. AS a business owner I am so saddened by Scott’s “Turn out the lights article”. He did not even address how “Big Law”, “Big Unions” and “Big Corporations” own the Democatic party and there is little hope of small business having a future in this once bountiful state. The gap between the rich and poor is bigger now then ever in our history; way to go big government!

  4. I have been a life-long Californian and watched as the society has “progressed” to an anti-business state where the middle-class has all but disappeared with the loss of manufacturing jobs. Soon, when retirement arrives, my choice will be to move where my non-public pension will be enough to sustain me as opposed to those in the public sector who will receive more than their fair share to not work.

  5. Well said. Several of my longtime friends have left within the last 8 months are are planning to leave within 5 months, all because of much higher costs and taxes. Another friend is expanding his tool business in FL, due to lower taxes when purchasing equipment and taxes on profits. It does not make sense to manufacture in CA anymore, if you are going to ship the products out of state. The costs are too high versus the competition.