This week the Assembly
Revenue and Taxation Committee passed — with 6 voting yes and 3 not
voting — a bill that brings California in line with 47 other states by
exempting the sales tax on manufacturing equipment and giving working
families a fighting chance for higher paying careers. The
bill is AB 829 by Assemblymember Anna Caballero.
Unfortunately, the bill was amended to include offsetting revenue
sources, a difficult circumstance during tough budget times.
But the vote on the bill shows that legislators want to put out the
welcome mat for high wage employers.
Many in both
the capitol and media circles have argued that companies aren’t leaving
the state and they often use that as carte blanche to oppose the
removal of any barriers to conducting business in California —
including reinstatement of the sales tax exemption that our employers
lost back in 2003.
I don’t even care anymore about
proving the decisions of current and potential California
companies. It’s like arguing whether a
last place basketball team is really the worst in the league – no
offense to the Sacramento Kings. It’s not even an interesting
question anymore, and a last place team needs to do only one thing –
improve. Yes California is beautiful … no,
California doesn’t lose thousands of jobs daily to other states …
yes, we don’t know the reasons for all of the decisions being made all
over the country that don’t include California … no, the state won’t
crumble into the ocean … yes we’ve lost more than 30 percent of our
industrial base — most of those 530,000 job losses coming before the
recent economic recession.
Let’s just fix the
problem. Everything starts with signals to manufacturers that
this state wants these types of operations.
CMTA’s
president, Jack Stewart, issued a formal media statement today that
summed it up
perfectly:
"California has a
chance to lead the world out of recession and into a prosperous future
if we make economic recovery the front and center goal in the debate on
how to solve the budget crisis. Only through private sector investment
and new middle-class jobs, such as manufacturing jobs paying an average
$65,000 per year, can California enjoy sustainable tax revenue growth
to pay for important government services. To do this we must
capitalize on emerging and innovative sectors in new and traditional
technologies and
products."
The Sac
Bee’s Dan Walters wrote an entire piece this weekend on
understanding California’s woes and then called out "silly Republicans"
for trying to understand certain reasons for migrations to
Nevada. That trip was meant simply to gather information
going forward and the facts still proved a 2 percent growth in
industrial jobs in Nevada during the same time California’s sector
plummeted by 28 percent. No one ever said Nevada stole all
our manufacturing jobs. Eight legislators just wanted to ask
some questions about what Nevada was doing right. What
everyone in that room found was that Nevada was actively hunting down
business as a lifeblood of the state’s success.
Even
Gov. Schwarzenegger’s administration has gotten in on the
act. Two weeks ago, Brian McGowan, the Deputy Secretary for
Economic Development and Commerce at the state’s Business,
Transportation and Housing Agency wrote in the Capitol Weekly that California
"remains a powerful magnet for business." I challenge anyone
to find two companies that are exploring growth options that agree with
that statement.
If we were a powerful magnet for
employers, a $21 billion deficit wouldn’t be sitting on every
Californians doorstep today. This brings me to a formula that
we should all understand going forward after yesterday’s iniative
failures:
-
Take the state’s annual budget and divide that by
the state population. That gives you the per capita number
for running the state: Basically divide $132 billion by 27
million working age people and you get $4,888 per
person.
Then look at the per employee tax revenue of
a manufacturer. This is all the taxes the company pays in the state
(divided by the number of employees) plus the taxes an employee
pays. I asked one of our member companies for their
sample numbers. Basically their per employee tax revenue
amounted to $19,255 per year, which does not include the taxes their
employees pay on an average $60,000 salary. Compare that to
the revenue the state generates from the service sector that pays far
less tax revenue overall and a wage that is, on average, $20,000
less.
At that point, removing barriers for
manufacturing growth becomes an obvious step in the right direction for
the state.
Like Walters said in the end of his
piece, we should solely pay attention to our future. Agreed
completely. Then one must ask what we want to look like in 2
years? For many reasons, we want Californians making more
money, the state producing and selling innovative products, employment
numbers growing and a budget balanced to pay for bold government
programs. Making us a "powerful magnet" for the
next wave of innovative products will get us there. Global
recession or not, California will be in a better
place.