If You Are a Small Business, California Ain’t For You

Tom Scott
CA Executive Director, National Federation of Independent Business

Sometimes I wonder whether I could just reuse previous blogs and simply change a few sentences and words. Am I starting to sound like a broken record? By the way, a record is one of those round things your grandparents have and it plays music.

Seriously, the Small Business Entrepreneurship Council just released its annual Small Business Survival Index, and California has the best ranking it has had in five years. California came in at #46 out of 50. The reason for this is that we had a decline of 1 cent in our sales tax while other states’ workers’ compensation benefit costs increased. Before you start popping the champagne corks, though, you might want to read further into the study.

The only states with worse climates for small businesses than California are Rhode Island, Vermont, New Jersey, and New York. The best states for small business are South Dakota, Nevada, Texas, Wyoming, and South Carolina. Some of these are aggressively trying to pick off businesses from California.

California ranks at or near the bottom in such categories as personal income tax, personal capital gains tax, gasoline and diesel taxes, per capita state and local government expenditures and local government debt and highway cost effectiveness. What is truly interesting is that the study did not even look at the legal climate, which is horrible. I have heard from numerous small business owners that they can survive taxes or regulations, but just one lawsuit can put them out of business.

I truly hope that going into 2012 the Legislature will make our business climate a priority. California seems obsessed with the High-Speed Rail to nowhere and spends little time or effort on legal reform and our business climate. Make our state business friendly and businesses will come and prosper. Don’t heed these warnings and the voters might take a closer look at your record in 2012. Just saying…

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