Pro-Business States Target Anti-Business California

Posted: Nov 23, 2011 11:52 AM

In the Nevada Development Authority's latest ad on Fox News, entertainer Clint Holmes, broadcasting from McCarran Airport in Las Vegas, extols the airport's frequent-flier-friendliness and the virtues of living and working in Nevada:

There's more to Las Vegas than the strip. We're business-friendly, family-oriented and very cost-effective. It's time to relocate your business to the real Las Vegas.

This is one in a series of NDA promotional spots. In another, a fake news correspondent from KTAX (yes...kTAX) reports that Sacramento lawmakers don't want you to move your business to Las Vegas, with, " corporate income taxes, no personal income taxes and low worker comp fees."

Many states are trying to attract California businesses. In the latest issue of City Journal, Steve Malanga has an article entitled, "Cali to Business: Get Out!" He begins with the story of an Irvine, California medical-technology company that relocated to Salt Lake City, Utah. The CEO, Michael Beeuwsaert, explains how regulations spurred his move:

The tipping point was when someone from the Orange County tax [assessor] wanted to see our facility to tax every piece of equipment I had,” Beeuwsaert said. “In Salt Lake City at my first networking event I met the mayor and the president of the Utah Senate, and they asked what they could do to help me. No [elected official] ever asked me that in California.

Malagna goes on to explain that California is losing not only businesses, but also investment. A California Manufacturers and Technology Association study reveals that between 2007 and 2010, 10,763 industrial facilities were built across the United States. The number of those in California? 176.

That amounted to 4.8 facilities per 1 million people, the lowest rate of any state; the national average was more than 40. The same study found that of the nation’s $350 billion in investments in manufacturing facilities, just $8.7 billion was spent in California, a per-capita rate of investment less than one-fifth the national average.

A FOX Business article highlights companies that have left California in recent years. Intel recently moved a plant, along with thousands of construction and high-tech jobs, to Oregon. Business coach Joseph Vranich reflects on the California's loss and Intel's astonishing gain:

The Intel investment in Oregon, when you add it to Arizona, is $8 billion, with a “B,” so the exodus of capital from California is running at an alarming rate... Right now, Intel will probably save about 60% on their electric bill, but when the new environmental regulations and rates increase next year, their electric bill in Oregon could well be an astonishing 80% to 90% less than in California.

Yet liberals are still arguing that the problem with California is not that taxes are too high; it's that they're too low. In a conversation I had on FOX and Friends in January, Sally Kohn of Movement Vision Lab recited the liberal meme:

So, ok , look, California is not in a debt crisis because they mismanaged things. The reason Califonia a fiscal crisis is because A, we are in a recession so tax receipts are lower and B, at a federal level...we have cut taxes at the very very top to an unprecedented level, and thats why they have less money to pay for it....So, we've literally sucked all these resources out of the states, including California.

When I responded that lower taxes bring higher revenues, and that perhaps Northrop Grumman would have stayed in California rather than move to Virginia had taxes been lower, Kohn continued:

California got here by cutting taxes

California hasn't cut taxes, nor has it cut the environmental regulations that make doing business there prohibitive. Virginia, Nevada, Oregon and Utah all have profited from California's failures. And if California listens to Kohn and her fellow travelers, even more states will benefit royally.