The Sacramento Bee reported this weekend that "business groups" are starting to support tax increases as a partial solution to California’s historic budget shortfall. It is important to note that new tax proposals must come with a plan for true economic stimulus. Without it we’ll continue to lose companies like Opti-Solar who announced last week that they were laying off 105 employees, while its solar panel competitors thrive in Oregon, and APL who recently announced it is moving its shipping line headquarters from Oakland to Arizona to take advantage of lower operating costs. Can you imagine a shipping company moving to landlocked Arizona because the cost of doing business in California is too high? It’s true and now California has lost a company that operates 130 ships worldwide that had its headquarters in the Bay Area for longer than California has been a state.
While a plan to increase state taxes to bridge the state’s current budget crisis may be necessary, if we don’t make California a more favorable place to do business we risk repeating the current budget crisis again and again. Even before an estimated $6.4 billion in business tax increases from last year’s budget, California employers already paid taxes that were 20 percent more than the national average. It’s beyond me how we can expect to have the most costly state government in America, and at the same time neglect and abuse the primary source of our wealth. When you have a goose that is laying golden eggs, the wise course of action is to keep the goose healthy and productive.
Later this week a group of diverse employers and associations will release a list of proposals to stimulate our economic revival and, hopefully, change the Legislature’s attitude about the need for a healthy business climate. Since 2001, the average annual wage of the new jobs we have created is $40,000, while the jobs we have lost have averaged $66,000. If we sustain the policies that are responsible for that trend, we can only expect more of the same.
Business provides the jobs, fees and taxes California government depends upon to fund a wide range of services. The wages employers pay their workers in turn contribute to sales and property taxes. With a continuing loss in employers and operations, added costs on business will only hasten California’s economic decline. Over the past several decades, we have implemented far too many well intentioned policies that collectively have made it increasingly difficult for business to thrive and grow in California. Every environmental regulation adds to the cost of doing business as does every workplace mandate. Our energy costs & business taxes are among the highest in the nation and, now, we look forward to new greenhouse gas reduction mandates that promise an expensive new wave of business costs.
Senate pro Tem Darrell Steinberg was recently quoted in the Sacramento Bee saying "We aren’t creating enough middle class jobs." Well, employers can’t create middle class jobs if they can’t grow their businesses in California.
Today, President Barack Obama gave his inauguration address and made his first official plea for economic change. He called for bold swift action to create jobs and create a new foundation for economic growth. California’s leaders must make the same pledge.