“Washington is not a place to live in. The rents are high,
the food is bad, the dust is disgusting and the morals are deplorable. Go West,
young man, go West and grow up with the country.”
How things have changed. Now California is shoving people
back to the East. Horace is still right about Washington but there is a lot of
East between California and Washington and California Businesses are heading
East in bunches.
****************
The business consulting firm Spectrum Location Solutions
recently estimated that 660 California companies have moved 765 facilities out
of California since 2017.
(Read the above paragraph again.)
This includes 10 corporations that have moved their
headquarters out of San Francisco.
Discount brokerage firm Charles Schwab was founded in San
Francisco in 1973 but it just announced it is relocating its corporate
headquarters from San Francisco to lower-cost-and-low-tax Texas.
Schwab has many Good Business Reasons for making this move.
Thinking from a Business Point of View can you quibble with any of these
reasons?…
- Schwab will pay much lower taxes in Texas.
- The Lone Star State imposes a 0.75% Franchise Tax on Business Margins (total revenue minus compensation), which is substantially less than the Corporate Tax Rates in California (8.84%).
- The city of San Francisco also imposes a 0.38% Payroll Tax and a 0.6% Gross Receipts Tax on Financial Service Companies.
- Texas has no Individual Income Tax, while the top rate on Income and Capital Gains in California is 13.3%.
- The Lone Star State’s Housing and Energy Costs are substantially lower.
- The Average Monthly Rent in San Francisco is $3,870 compared to $1,200 in Dallas. This means Schwab workers and executives can have a Higher Standard of Living, and More After-Tax Income, at the same salaries.
Up until now the State of California has combated the loss of
tax revenue caused by all these companies leaving because of High Taxes and High
Regulations by raising the Taxes and Increasing the Regulatory Burden on the companies
that have not left.
The Governor has said raising the Taxes and Increasing the
Regulatory Burden on his remaining businesses is the only logical course of
action he can take.
When a reporter questioned this “Logical Course of Action”
the Governor looked at him with complete disdain and said, You are being silly. I can’t tax companies that have left the State. I
can only tax Companies that have not left the State and by golly I’m going to
make them sorry that they are stupid enough to have their businesses in my
State!
Yep. That ought to fix the problem…Or will it?
Would I kid u?
Smartfella
