High Taxes Mean It’s Lights Out For California
High Taxes Mean It’s Lights Out For California – Money Morning
According to columnist Paul Krugman that’s a winning formula.
The liberal-leaning economist recently wrote, “California is on the road to recovery due to tax and spend liberals, Republicans and conservatives are the problem, tax and spend is the way to go.”
Yet, since the beginning of 2013 a total of 158 companies have left the golden state and more are lining up to make their own great escape. That’s up from just 51 in in 2009.
If this trend continues Silicon Valley may soon become nothing more than the northern extension of Death Valley as search for more profits creates a mass migration states like Oregon, Texas, Nevada, Utah and Arizona.
With considerably lower taxes, these states are welcoming California businesses with welcome arms.
One of them is Intel which recently announced that it will be investing billions to upgrade factories in Arizona, in addition to building a new factory in Oregon.
This move will create between 6,000 and 8,000 construction jobs and up to 1,000 high tech factory jobs outside the Golden State. With an unemployment rate of 9.4% that’s the thing California needs. But the truth is each employee hired by Intel in these states will cost. 30% to 40% less than the same employee would in California.
In fact, even the utility bills are welcoming in Oregon. The savings in electricity alone is as much as 80% to 90% compared to California.
Then there’s California’s polar opposite: Texas.
A “no tax state”, Texas takes it a step further by touting itself as the last bastion of freedom in this country. To its credit, four million people have migrated to Texas in the last 10 years.
Admittedly, it is due to a multitude of reasons but foremost is the economic opportunity Texas offers.
So how does California compare to Texas? Here’s the breakdown:
California has the 4th highest Cost Of Living Index in the country. Texas has 2nd lowest.
Minimum wage is$8.00 in California. It’s $7.25 in Texas.
Including taxes,$8.00 buys $6.05 in goods and services in California. In Texas the same $8.00 buys $7.25
Proportionately, there are42% more poor people in California than Texas.
In California it is hard to start business requiring 4 to 5 years to break ground and start construction. In Texas it is 4 to 5 months.
The gas tax is $0.49 a gallon in Cali. In Texas it’s $0.20
Median rent is $801 in Texas….$1,163 in California.
And the median home price is $128,100 in Texas vs $370,000 in California.
But those aren’t the only reasons to like Texas….
Here’s another: One state is poster child for big government while is representative of free enterprise.
Here’s why. Just take a look at how each state went about building a bullet train.
It’s a tale of two states:
In Texas: A bullet train was suggested and approved for construction from Houston to Dallas, financed totally through private business. Total cost for this venture is $10 billion with a completion date as scheduled. No increase in fees, overages or extensions are expected.