We Californians are a pretty proud bunch. We like living in a state that has been in the forefront of pushing for workers’ rights, civil rights, and environmental protection. We are happy to lead the way and watch the rest of the nation follow.
But every year, we hear the same smack talking. You know the line: "California has a terrible business climate." We hear it over and over from the employer associations and Republican politicians. They say businesses are leaving because we have too much regulation, high business taxes, and too many worker protections. Conservative think-tankers put it this way: "California is already one of the most heavily taxed states in the nation, and its high tax, high regulation environment is driving many of its most productive people and businesses out of the state."
Wow, they make it sound so bad it's almost like they are trying to convince companies to leave! And I’m not sure who he considers “productive people,” but workers across the country have been setting records for productivity. Mass layoffs and budget cuts in California mean workers are delivering more packages, driving longer routes, fighting more fires, helping more laid-off workers, cleaning more hotel rooms, carrying heavier caseloads, and teaching more students than ever before. And I haven’t heard about all these “productive people” jumping on buses out of state. As for businesses fleeing, a recent Public Policy Institute of California (PPIC) study already debunked that myth.
Even the tax argument fails when you look at the facts. The Council on State Taxation, a business-friendly group led by corporate executives, does an annual study of the tax burdens in all 50 states. Their 2010 report found that California’s business tax rate at 4.7% is the national average. It also concluded that the share of state taxes paid by corporations has been steadily getting smaller.
But I get the point. All our problems -- high unemployment, prolonged recession, and an overwhelming budget gap -- are our own fault, because we’ve failed to make our state friendly to business. Or, as an unnamed CEO was quoted saying in CEO Magazine, “Texas is pro-business with reasonable regulations while California is anti-business with anti-business regulations.” If only we could be a low-tax, free-market-loving state like Texas, right?
Oops, maybe not. Turns out Texas is now facing a $27 billion dollar budget gap, a deficit similar in proportion to the one we face here in California. But how could a state that did everything right in the eyes of the CEOs be just as bad off as we are? Apparently the Texas economic model, which one policy professor describes as “"a low-wage economy with greater income inequality," is not sustainable. While Texas Governor Rick Perry bragged about all the companies that left California for Texas, local newspapers called the claim “grossly inflated.”
For now, I’m happy to be a California girl. Hopefully the Chamber will get there someday too.
Posted on 02/09/2011 • Permalink