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California Businesses Leave the State by the Thousands
- baggy_trough 6y agoGovernment can be modeled as a stationary bandit. Unfortunately, California's may have over-extracted in recent years, and it only looks to get worse from here.
- CalChris 6y agoFifth largest economy in the world. We must be doing something right.
- almost_usual 6y agonice weather and nature that’s burning?
- tjbiddle 6y ago39 million people also places it at #37 in population if it were a country. Throw in Hollywood, Silicon Valley, piggy-backing off the US as a whole, and having a beautiful coastline and great social culture. What do you expect? I do everything I can to minimize my involvement with California for my businesses.
- dragonwriter 6y ago> piggy-backing off the US as a whole The US as a whole net extracts from California; the piggy-backing goes the other way.
- asdfaoeu 6y agoSounds like they should increase taxes in California to encourage businesses to move to other states.
- gamblor956 6y agoCalifornia contributes more in taxes than it gets back in federal spending. Kansas, et al, owe their continued solvency to California's continued generosity.
- zbrozek 6y agoSuccess is due to nice weather. Now that that's gone, well...
- nerbert 6y agoTell that to Mediterranean countries.
- dragonwriter 6y ago> Success is due to nice weather. If by that you mean a combination of soil and climate suitable for some of the most productive agriculture in North America, that's true. Otherwise it's more a series of other industries, starting with extractive (1849 wasn't known for a “nice weather rush”) but more recently mostly creative & technological. > Now that that's gone, well... It wasn't gone during the long drought, and it's not now.
- oehtXRwMkIs 6y agoYou're actually underestimating the agricultural output of California, it's the most agriculturally productive place (mainly Central Valley I believe) in the history of civilization.
- beaner 6y agoCalifornia has a monopoly on the entire mild-weathered west coast of the United States. Its government is permitted to be less effective and less efficient because people are willing to pay extra for its natural geography.
- shuckles 6y agoCapital being more abundant than mild weathered land is bullish for the state, no?
- beaner 6y agoI'm not sure what you mean. I think so, but beside the point. I was replying to the idea that California government "must be doing something right," which is untrue.
- jayd16 6y agoSo what you're saying is California can continue its current policies and be just fine?
- almost_usual 6y agoYeah, this smoke is great.
- phobosanomaly 6y agoWith: 1. The largest public university system in the country (Cal State - 3rd largest on the planet) 2. The absolutely massive UC research machine 3. An established, inexpensive feeder system with the California Community Colleges (hello social mobility) 4. Plenty of world-class private universities (Cal Tech, Stanford, Claremont Colleges, Deep Springs) 5. Access to the Cali-Baja industrial cluster (California has a LOT of manufacturing, it's just in the other California) 6. Some insane levels of cultural diversity (many folks from different cultures can feel at home here - more so than say, Oklahoma) 7. Over 7 medical schools 8. Relatively cheap land in the fast-growing Inland Empire and the Antelope Valley (all it needs is a dash of HSR) 9. Massive agriculture in the San Fernando Valley 10. A massive aerospace industry (Antelope Valley - Skunkworks, etc.) 11. The port of Los Angeles is the largest port in the country followed by the second largest port in the country ....Long Beach, 9th largest is Oakland. 12. The San Diego biotech cluster with its ties to UCSD (Celera, which produced the first draft sequence of the human genome was up north in Alameda, California) California is an economic machine with infrastructure no other state in the country can come close to.
- almost_usual 6y agoThe central valley is working class Trump country. The mountains are getaways for coastal wealth. You have some minorities that are disadvantaged who clean up after the coastal wealth or farm. Housing is near impossible and stopped at all costs to preserve inequality. If you grew up here you probably had to move, if you have kids here the chances are they won’t be able to afford a home without your help (assuming you’re a home owner). Welcome to California.
- phobosanomaly 6y agoYou and I might have a different experience of California Housing is actually very available and inexpensive in the inland areas, which are fast-growing (Inland Empire, Antelope Valley, etc.). Cheap housing in places like Palm Springs, plus the influx of coastal money has put a LOT of children of landscapers and restaurant workers, and hotel workers, etc. through the California public university system. California is a sanctuary state with an excellent community college system, so the children of those disadvantaged minorities have a definite shot of transferring to a school like Berkeley, or even a Cal State, which offers an excellent education at a reasonable (in a relative sense) price. The economy in the mountains is BOOMING right now, as that coastal wealth funnels into a myriad of small businesses.
- jandrewrogers 6y agoOn a per capita basis, California's GDP is not remarkable and is significantly worse than some other States. Having a large economy is a function of having a large population, it doesn't imply an exceptionally productive economy. I'm a native Californian but I've never understood the odd "fifth largest economy!" flag waving given that it is a product of population size. The "doing something right" may not be the thing you are trying to imply.
- jayd16 6y ago>On a per capita basis, California's GDP is not remarkable and is significantly worse than some other States Per capita its still the 5th(6th if you include DC) highest and 30% more than the median state. I think people reference the fifth largest economy factoid because it also speaks to how Californian has several large industries from tech to agriculture. https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_GDP_per_capita#Current https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
- CalChris 6y agoActually on a per capita GDP, California is 8th, 5th if you look at current rather real. Hey, we're right behind Wyoming and North Dakota. Shudder the thought. However, we're 7th in per capita income with Wyoming and North Dakota nowhere to be seen. Sounds like some states have an income distribution problem. https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_GDP_per_capita https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ... https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_GDP_per_capita https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ... I'm also a native California, born, bred and educated, and I've seen this U-Haul trucks headed for the border tripe every few years, this one from Stanford's (notoriously conservative) Hoover Institute. It's the usual right wing nonsense.
- dragonwriter 6y ago> On a per capita basis, California's GDP is not remarkable, and is significantly worse than some other States. It's #5 among states, a little over 7% behind #1 Massachusetts, and over 20% ahead of the US as a whole, and over double #50 Mississippi. > Having a large economy is a function of having a large population, it doesn't imply an exceptionally productive economy. California has both a large population and, on a per capita basis, an exceptionally productive economy among US states. It's true it's abstractly possible for the former to substitute for the latter in aggregate output measures, but that's not really the case for CA. https://www.statista.com/statistics/248063/per-capita-us-real-gross-domestic-product-gdp-by-state/ https://www.statista.com/statistics/248063/per-capita-us-rea...
- ffggvv 6y agono that means something right happened decades ago and its still coasting off that.
- refurb 6y agoExactly. New Jersey was also a powerhouse state 75 years ago. Been in a slow decline for the past few decades.
- refurb 6y agoI'd argue California's economic success is in spite of the government (or at least the government of the last 4 decades or so), not because of it.
- primrose 6y agoDetroit took decades to go bankrupt. Sometimes previous polices can have long term effects before diminishing.
- daenz 6y ago>The state also intends to make this [wealth tax] law follow you for up to a decade should you leave. Clever politicians? Maybe, but just how will they convince other states to cooperate once you relocate? Not to mention whether this future provision is constitutional. Holy smokes, politicians are trying to extract a state wealth tax on individuals after they leave the state? Am I reading this correctly?
- ganoushoreilly 6y agoYes they are very serious. But good luck getting any states to go along with that. It's a crazy amount of lawsuits awaiting to happen. Instead they should address why people are leaving.. Maybe.. just Maybe.. it's the knee jerk policies being put in place that will do more economic harm than good.
- jjeaff 6y agoWhy would states need to be ok with it? California is already able to levy the bank accounts of people who have never set foot in the state if they deem that you owe them tax money. I see no reason that any state would stick it's neck out to protect any individual transplants.
- rayiner 6y agoThat’s not totally crazy. You probably couldn’t have earned that wealth in another state, so why shouldn’t California take its cut?
- Judgmentality 6y agoBecause they already did with the taxes that already exist?
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- thaumasiotes 6y ago
- djcapelis 6y agoI always find it amusing when a policy thinktank founded by Herbert Hoover wants to dispense advice on how to build a strong economy. Welcome to California. While we have plenty of problems, fundamentally, if your company can’t cut it here and decides to relocate to Texas, that’s not an indictment of California. It’s weak companies fleeing to a place where the government is more willing to subsidize their operations at the expense of their residents.
- refurb 6y agoSo companies leaving have nothing at all to do with how the state is run? You don't think that the housing policy of California has any impact on companies struggling to hire because of housing costs? Because it definitely impacts the Bay Area company I work for.
- djcapelis 6y agoCompanies are plentiful and as the fifth largest economy in the world we don’t have to fight like pigeons over our cast offs like other states do. In the time that ~700 commercial entities left, how many more do you think were created here? Housing here is a legitimate problem but the companies that flee to Texas because of lower taxes aren’t worth keeping.
- refurb 6y agothe companies that flee to Texas because of lower taxes aren’t worth keeping Famous last words.
- djcapelis 6y agoAre they? If so, we’ve been saying them for about the last 30 years and things seem to be fine.
- refurb 6y agoThere are plenty of states who were once economic powerhouses and are either stagnant (Chicago), in decline (Mid-west) or empty shells (Detroit) of what they were. Saying "I don't care if businesses leave" seems like taking for granted that they'll always be there (or want to come to your state).
- Mayzie 6y agoWow, the absolute and obvious bias in that article, not to mention the comments. Is there a more neutral source, or at least a source that isn’t so blatantly one-sided?
- djcapelis 6y agoWhat did you expect? The Hoover institution is a fundamentalist think tank and their analysis is written entirely to pitch lower taxes and less regulation as always being the right thing. In short, they are living up to the level of brilliance of the economic policies of their founder.
- pmoriarty 6y ago"blatantly one-sided" Not really surprising. This article is from the Hoover Institution[1], which has: - Condoleezza Rice as its director - John Yoo (torture apologist for the Bush Jr administration) as a Visiting Fellow - Henry Kissinger and Donald Rumsfeld as Distinguished Visiting Fellows and which bought its Policy Review publication from The Heritage Foundation[2]. [1] - https://en.wikipedia.org/wiki/Hoover.org https://en.wikipedia.org/wiki/Hoover.org [2] - https://en.wikipedia.org/wiki/The_Heritage_Foundation https://en.wikipedia.org/wiki/The_Heritage_Foundation
- throw_m239339 6y agoI mean a lot of these people also sit on different boards of many hip western US tech startups. I don't think most of these people are actively involved in partisan politics anymore.
- pmoriarty 6y agoBut when they do opine on political, social, and economical issues you can be sure they're not going to be siding with The Nation.
- refurb 6y agoI assume you also call out the "absolute and obvious bias" when you agree with the conclusions of an article?
- shuckles 6y agoYou would think that with 9,000 relocations, this article would come in with stronger evidence than a posturing wealth tax with no path to approval (and essentially abandoned), and a San Diego business that happened to relocate to Austin after being acquired by an Austin-based business. California has many issues between tax policy and regulation by mob approval, but this is a very weak argument.
- primrose 6y agoOr taxes are already ridiculous and this is a sign of things to come. It's a huge red flag especially when Rob Bonta get's on TV to promote it. https://www.youtube.com/watch?v=QrEK5hgr3vY https://www.youtube.com/watch?v=QrEK5hgr3vY
- kergonath 6y agoUnsurprising take from a Republican mouth piece. The figure they give is 766 for 2018-2019, far from “thousands” (which comes from their figure of 13,000 between 2009-2016). The sources they cite don’t even agree with these numbers. Everything after the first sentence is just an unsubstantiated rant. Now I need to wash my brain.
- smabie 6y agoDo you think you would be less critical if you agreed with it?
- jschwartzi 6y agoThey're using a really common anti-tax argumentation tactic. Instead of establishing a causal link between the 966 business that left and the corporate tax rate by doing a study they've simply called 2 people and quoted them in the article about why they left. So what about the other 964 business owners? Why don't they call those people and ask them too? The fact is they have no idea why those people left, and they have no idea why the other 13,000 businesses left. And they say nothing about new businesses being created. The rest of the article is some cherry-picked facts about how much it costs to start a business. But no explanation as to why that's unreasonable other than that it's more than any other US state. The only article about "Regulations" is a Cato Institute ranking. The Cato Institute works tirelessly to eliminate anything that they see as impeding businesses. But some regulations are good. Just because California ranks highest in regulation doesn't mean anything. It's just a smoke screen to convince us there's a problem. I'm left to conclude the author has no idea what they're talking about.
- kergonath 6y agoI have no skin in the game (though no love for the current version of the GOP, either) and actually read the thing, along with their sources. I’d like to think I’d be critical of another fact-free rant after wasting time on it, regardless of the slant.
- taurath 6y agoThe Hoover Foundation isn’t exactly unbiased. The thousands comes from the “2009 to 2016” period. No mention of how many businesses were created. Nor comps of other states. I believe that lots of people wish they could move their business out of state. I also believe many don’t because they actually like it here, it’s access to a ton of well off customers with cash to burn, and while they grumble about the regulatory burden it also creates quite a nicer place to live. I’m sure the latter comment will get lots of attention as there’s innumerable people who are sick of California. I’m looking at moving back after 6 years away.
- jacobolus 6y agoThe Hoover Institution is really a stain on Stanford’s reputation. Full of pseudo-scholars who start with their conclusions and then hunt around for cherry-picked evidence, but don’t spend too much effort worrying about the details, and never bother to admit when they were wrong. It’s fitting that Condoleeza “we don't want the smoking gun to be a mushroom cloud” Rice is now the director. The example of the day is Scott Atlas, Trump’s new darling “anti-Fauci” who (without any particular expertise in epidemiology or public health, and without any kind of convincing evidence or reasoning) has concluded that we should just give up against Covid19, and disclaim any responsibility for the results.
- rayiner 6y agoDr. Atlas had some bad judgment getting involved with the Trump administration, which has a unique ability to snap defeat from the jaws of victory. But you’re misrepresenting his policy recommendation, which is actually not that different than what has been tried in other countries: > Dr. Scott Atlas is the Robert Wesson Senior Fellow at the Hoover Institution, an accomplished physician, and a scholar of public health. For several weeks, Dr. Atlas has been making the case in print and in other media that we as a society have overreacted in imposing draconian restrictions on movement, gatherings, schools, sports, and other activities. He is not a COVID-19 denier—he believes the virus is a real threat and should be managed as such. But, as Dr. Atlas argues, there are some age groups and activities that are subject to very low risk. The one-size-fits-all approach we are currently using is overly authoritarian, inefficient, and not based in science. Dr. Atlas’s prescription includes more protection for people in nursing homes, two weeks of strict self-isolation for those with mild symptoms, and most importantly, the opening of all K–12 schools. Other countries had relatively brief shut downs, and had targeted reopenings based on risk profile. Schools have been reopened in Europe since May: https://www.nytimes.com/2020/05/10/world/europe/reopen-schools-germany.html https://www.nytimes.com/2020/05/10/world/europe/reopen-schoo... His view is probably the correct one, at least if anybody was competent enough to implement it. We should isolate high risk patients, quarantine the sick (real quarantine, like they do in Asia, not just “go home and infect your family” we do here), and let everyone else get herd immunity.
- wccrawford 6y agoI can't really be surprised that a place with high cost of living and a focus on helping people over businesses is going to have high taxes for both those people and those businesses. While some businesses aren't tied the are and will leave, most of them are making money from people in that area and need to stay there. If enough of those businesses leave, I'm sure the government will start to cater to them again, balancing things out again.
- qotgalaxy 6y agoI thought there was a rule against politics here.
- lwigo 6y agoWhat does this mean (if anything) for engineer salaries 1) in CA and 2) elsewhere in the country? edit: VMware Cuts Pay for Remote Workers Fleeing Silicon Valley https://www.bloomberg.com/news/articles/2020-09-11/vmware-twitter-cut-pay-for-remote-workers-fleeing-bay-area https://www.bloomberg.com/news/articles/2020-09-11/vmware-tw...
- deleted 6y ago[deleted]
- mark212 6y agoThis is such a misleading essay. AB 2088 (to tax net worth over $30 million at 0.4%) was a gut-and-replace two weeks before the end of the session which never even got a vote in committee.[1] It hardly reflects the will of the Assembly, much less a serious attempt to change California law. The other parts of the essay do a bait-and-switch between noting that some businesses are leaving and implying that it’s the over-regulated business environment —- but if you drill down it’s really motivated by the state income tax. Which, yes, is high and can be significant especially on the sorts of people that are successful at running their own business, which is to say high earners. And still, how many businesses did California lose in 2018 and 2019? Less than 800 total. So out of the 40 million people that live here, 0.001% chose to leave every year. Even if that’s a net number (which the author doesn’t clarify) it doesn’t rise to the level of something policy makers should care about. One would think economists writing at the Hoover Institute would be more rigorous about their facts and argument, and not just whine in print and get it published. [1]https://leginfo.legislature.ca.gov/faces/billHistoryClient.xhtml?bill_id=201920200AB2088 https://leginfo.legislature.ca.gov/faces/billHistoryClient.x...
- refurb 6y agoAnd still, how many businesses did California lose in 2018 and 2019? Less than 800 total. So out of the 40 million people that live here, 0.001% chose to leave every year. I assume a business would have more than 1 employee?
- jjeaff 6y agoI would assume few businesses that move would convince a significant number of their employees to move. In other words, I can't imagine very many businesses with lots of employees moving at all.
- refurb 6y agoThere have been a few very large companies who have moved their headquarters out of state. From what I can remember, McKesson (top 3 drug distributor), Schwab. Of course they are headquarters, not the entire companies, so it's still only a few thousand. Regardless, I don't think California is hurting for companies. At least not right now.
- ChuckMcM 6y agoI'm always curious in these things how they will cherry pick the data to achieve their narrative. In 2018 California had 954,000 businesses[1] according to the Census bureau. If we take the "13,000 have left between 2009 and 2016" (why stop there?) that would represent nearly 1.4%. However the Hoover Institute doesn't actually tell you if they were "small business" or "regular businesses". That can be important because there are nearly 4 million small businesses in the state[2] and a departure is a departure, small, medium, or large. If use 3.9 million as the total number of businesses that is just .3%. Every year people argue "California taxes too much, businesses are leaving in droves" but that isn't supported by actual business license data nor employment data. Over the last 10 years California consistently has the largest economy of all 50 states. Nobody likes taxes, and I personally don't like misleading articles. [1] https://www.census.gov/quickfacts/CA https://www.census.gov/quickfacts/CA [2] https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-CA.pdf https://www.sba.gov/sites/default/files/advocacy/2018-Small-...
- tootie 6y agoYeah and doesn't California have Silicon Valley and Hollywood? Wake me up when Google and Universal leave California.
- primrose 6y agoWhat if they just stop investing and build elsewhere?
- kikokikokiko 6y agoMost Hollywood movies are already being filmed on the Vancouvers and Alabamas of the world, so in a sense they have already fled the burden of California's regulations and taxes. But of course the hypocrisy is strong on this field, and the people involved in this business are the first to demand more and more taxes. In the end, they can avoid it. The mere mortals that run a mom and pop business can't.
- fooker 6y agoI can imagine people saying the same thing about Detroit 50 years ago.
- jedberg 6y agoThey do make one good point in this essay -- the $800 annual corporate fee is ridiculous. It's completely out of line with other states. It's not high enough to get me to move, but still. At the very least it should be waived if your profits are less than $800.
- rossjudson 6y agoOne-sided drivel. "The bill would impose a tax of 0.4% of a state resident’s worldwide net worth in excess of $30 million" becomes "tax wealth at 0.4%".
- primrose 6y agoThe US income tax was only supposed to be applied during war time for the wealthy. Now it applies to everyone. If this does pass expect it to effect most people with some assets in the state in a decade.
- rossjudson 6y agoSo for huge numbers of people in California who really don't have significant net worth, 0.4% of very little is still...very little. Income tax seems like an overall success to me. It's not a uniform rate; it's a progressive system. So if the net worth tax ends up being applied more universally and progressively, it seem like that vast majority of people not holding on to huge fortunes really have very little to worry about. Here's the thing about California -- people living there have gotten net-worth-wealthy from real estate, and they have been able to capture huge increases without paying appropriate property taxes (because it's such a bear to attempt to increase property taxes). This has shifted paying for state services to use-based taxes, which are as far from progressive as you get (well, not as far as social security contributions, but not far off either). What should probably happen: Figure out a revenue neutral approach that blends a net worth tax with a reduction in sales taxes. That puts money back in the pockets of people who most need it. Interesting experiment: What would the social security tax rate be if you didn't cap the maximum income it applies to? It's currently around 15% (individual and employer contributions combined). I have a vague memory of calculating that it would be around 4%, if you eliminated the cap (maybe that is individual-only, can't remember). In any case, social security is a poll tax, and the money flows straight into the general fund.
- primrose 6y ago> Income tax seems like an overall success to me. How would you quantify this? > people living there have gotten net-worth-wealthy from real estate 1. NIMBY's, excessive regulation, limits on building all drive costs up. 2. Scared money from over seas looking for safe haven in gateway cities. You're starting to see people flee CA in droves. Housing prices here will crash worse than the rest of the country. If the politicians don't reform laws and cut spending the state will turn into Detroit. > This has shifted paying for state services to use-based taxes Kicking fixed income grandma out of her house is immoral. People constantly moving due to property tax spikes is destabilizing. CA's is not lacking in taxes. CA is spending way too much. Other states are doing fine collecting a fraction of what we do adjusted for any kind of metric you can think of. > What would the social security tax rate be if you didn't cap the maximum income it applies to? You incur more liabilities. The contract is I pay more in, I get more out later. It's a safety net. We cap it so people have a minimum and don't die in destitution. > What should probably happen: Figure out a revenue neutral approach that blends a net worth tax with a reduction in sales taxes. That puts money back in the pockets of people who most need it. A wealth tax is opening a pandora box. Enjoy paying more accountants. You don't know how much something is worth until you sell it. Who get's to decide how much my paintings or my stock is worth? A politician? Why is it ok to tax someone on income they've already paid taxes every year for the rest of their lives. People will flee and no one will move here. Detroit. > social security is a poll tax No. A poll tax is something much much different.
- jshaqaw 6y agoAs a non-Californian I marvel at the constant stream of articles about what a hostile Soviet environment California is for private enterprise and yet over the past few decades it has been one of the greatest centers of innovation and wealth creation in global history. The rebuttable presumption when you here about some emerging world conquering company is that it is coming out of CA. Something right must be happening there!
- GoodJokes 6y agolol, from hoover.org. thats allllllllll you need to know