California Taxes, Over-Regulation Force 1,800 Businesses To Relocate

Leaving CaliforniaCalifornia – notorious for high taxes and a stifling regulatory environment – reportedly saw 1,800 businesses either relocate or disinvest from the state in 2016.

Business relocation consultant Joe Vranich wrote concerning the results of a new study he authored that he is advising clients “to leave the business-hostile state because its business climate continues to worsen,” according to Investors Business Daily.

Vranich, president of Spectrum Location Solutions LLC, noted that the 1,800 “disinvestment events” that occurred in 2016 were the most since 2008.

Additionally, 13,000 companies left the state during that nine-year period.

“Departures are understandable when year after year CEOs nationwide surveyed by Chief Executive Magazine have declared California the worst state in which to do business,” Vranich said.

“The top reason to leave the state no longer is high taxes,” he said. “The legal climate has become so difficult that companies should consider locating in jurisdictions where they will be treated fairly.”

One business regulation Vranich cited was California’s new Immigrant Worker Protection Act, which fines companies for following federal immigration law.

The consultant pointed out the law creates a dilemma for business owners: face fines either from the state or from the federal government.

“Think about it. California may penalize someone in business who is a legal citizen operating a legal business that is in compliance with every federal, state and local law, who pays state and local taxes, and who creates employment – and all that counts for nothing in the state’s eyes,” Vranich said. “Signs are that California politicians’ contempt for business will persist.”

Vranich argued that it’s not just this new law, it’s the plethora of other laws and regulations California businesses must comply with and the concern of what may be coming down the line.

The American Tort Reform Foundation said California is among the nation’s worst “Judicial Hellholes” for businesses.

According to the Vranich, three previous California governors – Gray Davis, Pete Wilson and George Deukmejian – have cited earlier versions of his business climate study to raise awareness of why companies are leaving the Golden State.

The top states where businesses are relocating, ranked in order, are: Texas, Nevada, Arizona, Colorado, Oregon, Washington, North Carolina, Florida, Georgia and Virginia.

The top 10 urban areas gaining from the California exodus are Austin, Texas; Reno, Nevada; Las Vegas; Phoenix; Seattle; Dallas; Portland, Oregon; Denver; San Antonio; and Scottsdale, Arizona.

Among the businesses that have left the state in recent years are Toyota, Occidental Petroleum, Chevron, Nestle USA, Carl’s Jr., Jamba Juice and Numira Biosciences, according to Chief Executive Magazine.

There was a net outflow of approximately 143,000 Californians leaving in 2016 over people moving in from other states, based on numbers from the U.S. Census Bureau.

The only reason the state’s population is not decreasing overall is due to the 100,000-plus people per year immigrating into California from other countries and the birth rate exceeding the death rate in the state.

In addition to business regulations driving people from the state, The Sacramento Bee reported that California lawmakers are concerned about the wealthiest residents fleeing due to high taxes.

California has the highest top income tax bracket in the nation at 13.3 percent, and its treasury receives a disproportionate 44 percent of income tax revenues from the top 1 percent of wage earners.

Vranich said he is glad he took his own advice and moved his business from California to the Pittsburgh suburb of Cranberry Township.

“I moved for three reasons — taxes, regulations and quality-of-life,” he said. “First, I’ll have greater freedom in my business now that I’m free of California’s notorious regulatory environment and threats of frivolous lawsuits that hurt small businesses like mine.”

“Finally, we are enjoying a superior qualify-of-life here. We bought a house larger than what we had in California for about half the cost. We can afford to engage in more activities because the cost-of-living in Cranberry Township is 44 percent lower than in Irvine.”

This article was originally published by Western Journalism

Comments

  1. Being a difficult event, moving out of state for those on the lower income scale and on the upper level of age, I am working hard to find a way for us to relocate. No business, just a retired couple, fixed income of course, finding it emotional difficult to live in California.
    California, a state that has effectively left the union and is no longer at part of the United States.
    California, a state that has effectively set aside the U.S. Constitution and the Rule of Law for their own perceived opinions on how their Citizens should conduct themselves outside of the Bill of Rights!
    Future does not look bright for this state. With illegals calling all out all the rules, consuming all the tax revenue, and littering a once golden state into nothing but a rubbish heap.
    Sad!

  2. The Captive says

    CA is practicing to become like CHICAGO with over-regulation! Is it becoming like NYC? It is because of the tyrants of the LEFT. They have managed to see the state burn up at both ends and in between because of BAD FIRE LAWS THAT forbids land clearing in a proper manner. Now this over taxing in driving out businesses in droves because the LEFT -damn Dems. in control are totally NUTS AND OUT OF CONTROL. They express their hate in many ways -and the hate of the common man to do what is right is now reaping them losses as the whole state is destroying itself bit by bit. brown -jerry did his bit to destroy CA for over 40 yrs . and has not honored working like others that he delights in destroying. Over regulation and the Left dems are the tyrants!

  3. Relocation out really is the only option. With expansive taxation on the way, the regulatory burden and tax hit will only get worse. Taxing services and targeting Prop 13 for elimination is just the start of the massive assault on the taxpayers and home owners planned by the pols to pander to the illegals and parasitic class, all to be done in the name of “fairness”. Stop complaining and leave.

  4. JimM, there is a State right next to California that for the most part is resident and business friendly. There are many nice areas to live in the Northern part of Nevada as long as you stay clear of Clark County (known as East L.A.) and Washoe County as they have/are adopting many of the taxes/regulations that caused many of us who had lived our whole lives in California to leave. If you are not a liberal you will be welcomed in the vast amount of Counties and lots of “working class” neighborhoods to live in that won’t brake the bank to live in. The worst part is the entitlement minded in Clark County/Washoe County this past election elected two of the worst choices for Governor and a Feinstien look a like/votes like Pelosi for Senator so the next few years are going to be a handful trying to keep the Great State of Nevada “Great”. A huge amount of money came from Cali to get these two jerks elected and the fools of the 2 aforementioned Counties fell for it hook, line and sinker.

    • What we need is an electoral college for states also. That way the entire state has a voice in elections, not just the highly populated liberal enclaves.

  5. Stan Sexton says

    Also leaving are McKesson and Ken Fisher Investments which moved to Camas, Southwest Washington State. No state income tax in Washington, no sales tax across the border in Oregon. The “California” miracle is over. Wait until Newsom is King in our one-party state. Only the millionaires and state employees will be able to afford our huge taxes. Once Prop 13 is overturned, you’ll really see an exit. Think 20k in property taxes like New York or New Jersey.

  6. This semi-retiree took his CA equity, and a home-based small business to rural NV in 2016, and life is good.
    Miss it sometimes, but I’ve never been, or looked, back.

  7. Askeptic, congratulations. Having read this news blog for the past 5 years and read many of your posts I see you followed your own advice. It can be done but if married both must be on the same page. Having moved from Placer County the ONLY thing I miss is the tall pines.

  8. Alas, IMHO, the Golden State is no longer. With the rabid embrace of socialism by the Democrats in this state, and knowing that, as stated by Karl Marx himself, socialism is just a “rest stop” on the journey to full communism, I would have to rebrand this state as Communist California.

  9. “Democracy fails when over 50% of the population vote for people that will give them the largest share of the public coffers”. California is there.
    It will be the largest bankruptcy in history. Very much like Argentina the socialist agenda will convert California’s thriving economy into chaos.

  10. It has been a number of years, but, as I remember, an aircraft engine company, Avco Lycoming (?), had a factory near Los Angeles, Calif. to make and remanufacture piston engines for small airplanes, which included running them on test stands to see that the engines were okay. California passed an air pollution law that required the exhaust on the engines being tested to be cleaner than the surrounding air. Lycoming closed the factory and moved the work out of state. I’d like to move to another state, but I’m 71 years old and don’t have enough money.

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