WHO HAS THE ANSWER? TEXAS OR CALIFORNIA

Economic Issues

October 21, 2010
A Trenchant Tale of Two States

In Texas, the payroll count is back to prerecession levels. California is nearly 1.5 million jobs in the hole. Why such a difference? Chalk it up to taxes, regulation and attitude, says Investor's Business Daily (IBD).

California's business climate is notoriously bad.

* CEOs polled by the magazine Chief Executive have ranked it dead last for the past five years, with Texas, naturally, ranked first.
* To anyone seeking to start an enterprise and hire workers, moving to Texas is a lot less trouble than trying to change California's high taxes, overregulation and not-so-subtle bias against the profit motive.

The difference in tax systems reflects a difference in attitudes toward business and the wealth that business generates.

* Capital gains are tax-free in Texas; in California, they are taxed up to 10.55 percent.
* To an entrepreneur choosing where to set up shop, the message is clear: Texas wants to reward success; California wants to tax it.
* California also has developed a web of regulations that raises labor costs, spurs litigation and ties up building projects indefinitely.

Just how pervasive is the state's antibusiness attitude? Consider a recent story about how some governments in the San Francisco Bay Area are gouging the solar power business, says IBD.

If California officialdom stands for anything, it stands for renewable energy, against Big Oil and for "green jobs." Yet an informal survey by the Sierra Club found that some cities were charging sky-high fees for solar installations on schools, churches, retail stores and other buildings.

That just about says it all -- we're all for solar, but we can't have people making money off it, now can we? As long as California officials can say something like that with a straight face, the state faces a very long slog back to prosperity, says IBD.

Source: "A Trenchant Tale of Two States," Investor's Business Daily, October 14, 2010.

For text:

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=550471

For more on Economic Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=17