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Corporate Flight From California’s Socialism
May 07, 2014 / Written by: Gary Isbell
Major corporations are pulling up decades-old roots in sunny California and heading for greener pastures elsewhere. The list of companies is quite impressive: Nissan, Raytheon, Occidental Petroleum, Legalzoom, Waste Connections, Daegis, and Revionics. The most recent to join their ranks—Toyota Motors—becomes one of the 36,000 companies that have left between 1990 and 2010. California has been suffering a 3:1 outgoing ratio of businesses with no end in sight. 1 Toyota takes with it nearly 2,000 jobs from Torrence, California alone and will shift a total of 4,000 jobs to Plano, Texas.
While it is not uncommon for companies to move from one state for another, it is essential to understand the underlying reasons why. These decisions are primarily fiscally driven for both corporations and employees. However, it is not all about money. An intrusive government suffocates a healthy business climate. Corporations and residents are fleeing California because of liberal socialist policies that reward indolence and punish initiative. The very same policies that claim to help the poor and middle class have created a hostile environment for businesses, which in turn, hurts the poor much more than the affluent.
To have an idea of how running a business is viewed in California, the 2013 “Small Business Survey” by Thumbtack.com rates California’s small-business friendliness with the following grades; overall friendliness D, ease of starting a business D, Regulations F, health and safety F, employment labor and hiring F, tax code F, licensing D, environmental F and zoning D. 2 Is it no wonder that Chief Executive magazine consistently rates California the worst state to do business. 3
Currently 66 percent of California’s revenue comes from personal income taxes that start at 8 percent, and thanks to Proposition 30, the uppermost bracket pays a whopping 13.3 percent, the highest state rate in the country. As the corporate tax base flees, the burden shifts to personal income tax to fill state coffers. This places an unreasonable weight upon the much-maligned 1 percent who already pays 41 percent of the taxes because 50 percent of all adult Californians paying no income tax at all. To add insult to injury, Prop 30 was made retroactive. Now, this is real equality!
With California sitting on an estimated 400 billion barrels of crude, energy companies cannot fight the red tape necessary to pump the oil out. Consequently more energy corporations are relocating to high-energy states such as Texas, Louisiana, North Dakota and Alaska.
This issue is not about competition between Texas and California or any other state that provides great tax incentives to corporate America. It is about the dire effects of unjust socialist policies imposed upon our economy and society.
An article by David Horsey titled “Toyota Exit from Torrance Inflames Texas/California Rivalry,” attempts to show that there are equal pros and cons between the two states. Low on facts and rife with demeaning remarks, two comments stand out as very telling of liberals losing the battle to impose unjust socialist policies nationwide.
1) “Brown got voters to approve a tax hike to help balance the budget and fund education. Perry balanced the budget by slashing spending on education.”
2) “In lots of places in California, it’s tough to live on a middle-class family budget. In lots of places in Texas, it’s hard to live outside a church-going, football-loving, white, heterosexual lifestyle.” 4
The first deserves comment in that Horsey seems to imply that the only difference between California and Texas has a superior education system, in part because California spends more on education. It insinuates that money not character is the key element in education. The truth of the matter is that California only fared marginally better in the average SAT scores compared to Texas.
The second remark is crass stereotype aimed at the honorable hard working, “Ten Commandment” Americans of all races that have moral principles. It demonstrates the leftist dislike for religion and traditional marriage.
In essence, the California/Texas comparison is an example of the crystallization of two Americas. One sees America as having values worth fighting for and resents the injustice imposed by socialism in the name of “equality,” while the other sees the American way of life as a perpetual party, a huge business co-op. The corporate flight from California is a move away from the profound errors of socialism.
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