California Business Climate:
California Ranks Poorly in New Comparison of State Tax Climates

A comparative study of state and local taxes in the United States found that California compares poorly to other states in terms of how its tax climate affects the ability of business owners to keep their doors open.

The cost of doing business is largely impacted by tax burdens, and these tax burdens impact business location decisions for new facilities, the report from The Tax Foundation found.

The report, which looked at business tax competitiveness for mature firms as well as newly established firms, found that California ranks 34th for overall business climate for mature firms and 45th for newly established firms.

Factors included in the overall ranking include how state and local taxes affect a business's headquarters, R&D facilities, retail stores, call centers, distribution centers, capital-intensive manufacturing and labor-intensive manufacturing.

The study, published by the Tax Foundation in collaboration with KPMG, was released February 29. For the full study, click here.

In related news:

Survey Says 254 Companies Left California in 2011. In 2011, 254 companies relocated out of California – an increase of 26 percent over the number that left in 2010, according to Joe Vranich, an Orange County consultant who tracks business movements.

Mr. Vranich, of Spectrum Location Solutions, reported that in 2011, an average of 4.9 businesses left California each week, compared to 3.9 businesses per week in 2010 and one business a week in 2009.

The consultant counts companies that move jobs, facilities or headquarters out of California and "in carefully selected instances, companies making major capital investments in plants elsewhere that in the past would have been built in California."

Of the 28 companies that previously were based in Orange County, seven moved to Texas, three to Mexico, two to Washington and one each to 16 other states. Among the companies that left were Claim Jumper, Bubba Gump Shrimp Co., Hyundai Capital America, and EBay, which added 1,000 high-paying jobs to the Austin, Texas economy.

The top reasons for moving out of California are "high taxes, costly regulations and general hostility directed toward businesses by state and local public agencies," Mr. Vranich said. He noted that companies in virtually every industry are exiting the state.

March 16, 2012
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