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Just How Bad is California’s Business Climate?

Just How Bad is California’s Business Climate?

It is so bad that even New York is now trying to poach businesses from the Golden State.

….California’s governor hasn’t been nearly as dismissive of a television commercial promoting New York’s business climate that aired here in the Golden State during December.

“With over $1 billion in new incentives and tax breaks, this is an economy that launched over 50,000 new businesses last year alone,” the TV spot boasted. “Find out how to move or grow your business,” it concluded.

Now, the commercial didn’t directly mention the Golden State (perhaps out of New York Gov. Andrew Cuomo’s deference to Brown, a fellow Democrat). But it almost certainly was a shot across California’s bow.

I heard that ad this Christmas season, and even I was tempted to consider relocation. Then, I remembered:

But, I digress.

However, I will point out one of the most tempting aspects of the promotion was the “tax free zone” that was mentioned. The state’s governor Andrew Cuomo explained the shockingly free-market concept he plans to implement thusly:

“I mean no taxes. That’s what I mean when I say tax free – no business tax, no corporate tax, no franchise fee, no income tax,” Cuomo told officials at the University at Buffalo.

Under the measure, any new business that sets up on or near a SUNY campus, or at selected private universities or state-owned properties will pay no taxes for up to ten years. After five years, high-wage earners will have to pay income taxes. The locations are mostly upstate.

And how successful has this bold, new vision been? The economy seems better, even though the plan didn’t formally kick in until January 1st.

The unemployment rate in New York has dropped from 8.4 percent to 7.4 percent over the past year, and the state has 7.5 million private-sector jobs — an all-time high.

The housing market is coming back, with double-digit percent increases in home sales and median prices in October compared with a year ago.

…“Job creation numbers are up,” Cuomo said in an interview with the Albany Bureau. “Is it as much as anybody would want? No. But are the numbers up? Yes. And is the feeling better? Yes.”

It will be interesting to see where New York stands at the end of 2014.

How about California? My home state is an example of the “income inequality” that is the new mantra of progressives, as evidenced by a recent Wells Fargo report.

The uneven nature of the economic recovery is evident across California, with the coastal areas largely enjoying stronger job gains, reduced unemployment and more robust gains in home prices. The interior parts of the state have by and large not been as lucky, with meager job gains, stubbornly high unemployment rates and less of a rebound in home prices.

So, I suspect that at the end of this year, the major export of California will be residents.

That being said, San Diego citizen activists are in the midst of another petition campaign. The goal is to collect signatures to overturn the San Diego City Council’s decision to raise taxes on businesses by approximately 375 to 750 percent. Former Mayor Jerry Sanders explains:

This jobs tax could easily push us back into an economic recession. It will certainly cause some businesses to scale back or eliminate expansion plans, which will reduce job growth. Other companies will take their business — and local jobs — elsewhere and many more simply won’t consider moving to San Diego. At a time when our economy remains fragile, we cannot afford to put jobs at risk.

This jobs-killer also is a zombie tax because it will continue to automatically increase year after year without any review or approval by elected officials.

Hopefully, we will have the same sort of success as we had ousting Bob Filner. Otherwise:

(Featured image credit: US Census Bureau, h/t The Blaze).

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Comments

smalltownoklahoman | January 6, 2014 at 8:19 am

It’s a bold plan for New York to attract new business, hopefully one that will work well. As for San Diego, first words out of my mouth were “HOLY ****!” Seriously, how do they expect to retain business with a monstrosity like that in place?

    Remember, San Diego is the home of the Pacific Fleet–so you get a government subsidy there. Also, it is a major transshipment point for drugs from Tijuana–lots o’ cash there.

      curmedgeonincharge in reply to Marturion. | January 7, 2014 at 12:39 pm

      Yeah, but the cash doesn’t get taxed too much, so maybe it shouldn’t count. But that might have been your point.

I would avoid any state that shifts an already onerous tax burden onto the workers and elderly as NY is doing. That which cannot continue – wont.

With respect to the San Diego tax protest, there is almost zero information in the linked sources as to what the actual tax is, and what the current and projected values are. There’s an indication that the tax hike is only going to amount to $1,000,000 annually (there’s a reference that it will affect 100 subsidized homes) and if this is a tax that is imposed on property development on a square footage basis, it may be much more of a squabble between the developers & the city council than anything more serious.

With NO factual data in the protest site it sets off alarm bells for me; yes, 750% sounds huge but lets look at it like this — if the price of postage went up 750% it would hardly affect me at all; seeing as how I don’t send physical mail much and do electronic payments for everything. Yes, if I had to buy one stamp for $4, I’d grumble, but it wouldn’t be a bank-breaker.

I fully believe Californians are committing tax suicide, but I’m not sure the San Diego example given is the most persuasive example.

DINORightMarie | January 6, 2014 at 9:39 am

Why move from one police state to another?

Move to tax-free states like Florida or Texas, where the laws and regulations are ALL business-friendly (and not just for 10 years), where they encourage businesses to grow.

Henry Hawkins | January 6, 2014 at 9:51 am

CA -> NY = Frying Pan -> Fire

Coyote recently shutdown his business in Ventura county (he runs campgrounds for private and public parks.) He’s got some gruesome stories about the business environment in California.

http://www.coyoteblog.com/coyote_blog/2014/01/a-milestone-to-celebrate-i-have-closed-all-my-businesses-in-ventura-county-california.html

    JackRussellTerrierist in reply to Xmas. | January 6, 2014 at 8:03 pm

    I read your link. Yep, no surprises.

    My hubby and I abandoned the state two years ago. I had lived there my entire life. It would take several volumes of regular-sized books to list and explain what all is wrong with that state.

    It was once a magnificent state in all respects, probably the greatest the world had ever seen.

Move your business for CA to NY? Any business that does that deserves to fail.

Between Buffalo being unable to out from under the NYS Financial Control Board, every other city thinking they’re a mini-NYC, and a state government that makes the Russian mob’s business tactics look “boy scout”, anyone moving to NY is either stupid or looking to get on board NY’s benefit train.

We lost two seats in the last census for a reason. I believe DeBlasio alone will cost NY another two, with the state government costing at least 1 on its own.

Find it interesting. For one thing two dark blue state dueling for businesses. Have an idea though that some of the transplants may reconsider after a winter in upstate NY. My kid just moved from the NY North Country, w/I maybe 25 miles of two SUNY campuses, to Boulder for grad school, and couldn’t believe how warm Colorado is in the winter. Shorts or T shirts till Thanksgiving. Able to run most days – outdoors.

But what is missed here that NYC, under its new mayor is destined to move more businesses out of his city (and probably state) than are likely gained by these tax holidays for new comers. Which also points to the problem here – who is going to pay for these tax giveaways? NY already has revenue problems, and they haven’t yet had to deal with the big expansion of Medicaid yet, nor the expected exodus from NYC of high earners and big businesses, or even the full retirement of the Baby Boomer civil servants.

    JackRussellTerrierist in reply to Bruce Hayden. | January 6, 2014 at 8:12 pm

    IMO, this promise is a wolf in sheep’s clothing. Once the businesses are there, the state will pull the ol’ switcheroo on them and here come de taxes!

    I think it’s a sucker punch in waiting.

With taxes that high, all that will be left for San Diegans to do is sung about in South Park’s excellent “Jackin’ It in San Diego”

http://www.southparkstudios.com/clips/412210/jackin-it-in-san-diego

What’s missing from the chart is a quarter of Mexico migrating to California, duly receiving benefits equal to, if not exceeding, those of US Citizens. After voting for and funding the massive “inequality” they desired, the same people are seeking to divide the state into 6 pieces or relocate elsewhere. Unfortunately, they take their mindset with them.

    TrooperJohnSmith in reply to GoldenAh. | January 6, 2014 at 12:32 pm

    Yeah, the Californians who went to Washington and Oregon, and now Idaho, to “get away from California” are bringing their big government, I-know-what’s-best-for-YOU ways with them. Washington state is now and truly fu*ked up, as is Oregon.

    This is yet another reason why we need to Repeal the 17th Amendment. King County, Washington and Multnomah County, Oregon shouldn’t elect both senators for those states.

      Oregon Mike in reply to TrooperJohnSmith. | January 6, 2014 at 10:39 pm

      Yup. Oregon began its descent into madness in the 1970s. Back in about 1978, when I was in my early 30s, Eugene started to be flooded by people about my age from San Diego, fleeing California because it was about to be paved over. The flood continued, and Oregon went from being a mild, moderate Republican state to a true-blue hellhole (both houses of the legislature, and a re-tread governor, are Democrat). That is, west of the Cascades. Eastern Oregon, which is largely populated by ranchers, farmers, and loggers, is hardly a destination spot for California hipsters. It’s a sagebrush ocean of sanity.

      Your point about Multnomah County is valid. Even people in Eugene complain about its influence in state politics.

TrooperJohnSmith | January 6, 2014 at 12:28 pm

As a Texas business owner, I laugh at the ad promoting New York as “a great business climate”. I deal with suppliers in New York and California, and they say that running a small business in both states is pretty grim.

One of my suppliers in upstate New York says that when he hears that ad promoting business-friendly New York, he puts in a par with those e-mails that begin: “I am a high official in the oil Ministry of Nigeria, and I need your help…”

Hang on just a moment here, folks. Despite Governor Cuomo’s rhetoric, and “attaboys” from the New York Times – New York is ranked dead last in business tax climate among the fifty states for 2014 by the Tax Foundation. California is number 48.

How can New York produce a commercial that doesn’t explain the difference between fact and future vision. When the dust settles and the 7.1% flat tax on corporate profits is eliminated, individual taxpayers will continue to suffer the eighth highest state and local taxes in the United States. God help you if you are high-paid, making north of $150K and live in The City. where NYC taxes will exceed 12.5% of income and rank #3 among all cities.

I don’t understand how this would appeal to anyone. Why relocate somewhere for a temporary tax break when you could go to TX or some other Red state and have permanently lower taxes?

Otherwise, ten years in when your tax breaks end, you have to relocate again or go out of business.

    Henry Hawkins in reply to Aarradin. | January 6, 2014 at 12:52 pm

    “I don’t understand how this would appeal to anyone.”

    It is the conceit of the advertisers that there are only two places in America worth living in, California or New York.

      TrooperJohnSmith in reply to Henry Hawkins. | January 6, 2014 at 3:51 pm

      Madison Avenue ad agencies, with offices in El Lay, no doubt.

      One of America’s big problems is that the people who (try to) run things, and just screw it up worse, have horizons that are limited to the D.C. Beltway, Manhattan and a couple of enclaves in California, near Hollywood. They miss the other 99.99999999%, which is the Real America.

Burn_the_Witch | January 6, 2014 at 12:48 pm

It’s so odd when loyal Democrats like Leslie here write these sorts of pieces with the tone as if they weren’t responsible for voting these types of policies in place to begin with.

And like Leslie won’t continue to vote for the party responsible for this nonsense.

Not A Member of Any Organized Political | January 6, 2014 at 1:00 pm

Related, FYI

“Illegal Immigrant Can Practice Law in US Says California Court

Those looking for absolute absurdity in California at the start of the new year did not have to wait long.

CNN reports No green card? No problem — undocumented immigrant can practice law, court says.”

http://globaleconomicanalysis.blogspot.com/

Not A Member of Any Organized Political | January 6, 2014 at 1:49 pm

LOL

NY state didn’t tell you what type those supposedly new businesses are. Probably about 49,999 are personal escorts, at-home massage services, etc….

And how nice of Cuomo to be making tax free (isn’t having to live in New York tax enough?)….er…….that is
tax free “concentration camps” for businesses!

LOL

Snark Snark for the humor impaired.

Henry Hawkins | January 6, 2014 at 3:24 pm

I’m sure that companies already existing in NY state and having to pay full taxes will really appreciate Cuomo inviting in competing companies from out of state who won’t have to pay those considerable overhead expenses.

“Thanks, home state government! Oh, look, you dropped your knife, Governor. Here it is, right in the middle of my back…”

    Henry Hawkins in reply to Henry Hawkins. | January 6, 2014 at 3:26 pm

    It’s OK, Henry. The existing businesses merely have to lay people off to compete with newcomer businesses from out of state. It’s all good, right? Less jobs, less income tax revenues…. pure, unadulterated, liberal business smarts.

Right now the temperature is in the 60s in the Bay Area… but the last thing I want to do is go out, because I’d actually have to talk to the dimwits.

Phillep Harding | January 6, 2014 at 5:32 pm

Move to Alaska. The weather is much nicer.

Another Voice | January 6, 2014 at 8:28 pm

Wisdom from my 97 year old Mother, “What? Should I jump from the frying pan into the fire?”

There was a proposal to split the state in two some years ago, but the idea was North and South, which would only have given Democrats a couple more Senate seats. It’s the inland agricultural areas, until recently some of the most productive land on earth, that needs independence from the coastal despots.

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