IBD Editorial: California Won’t Fall Into The Sea — It’s Moving To Texas Instead

by Placerville Newswire / Apr 07, 2016 / comments

California Exodus: One can make only so many jokes about the Golden State becoming the Tarnished State. But California has done nothing to change the climate causing the decline. People are still leaving in swarms.

Red Texas is, of course, the primary destination for those fleeing blue California. And the evacuation has nearly reached a 10-year high: According to Internal Revenue Service data, 33,626 Californians quit their state for Texas in 2013 and 2014, out of the 250,000 who left the state.

“The number of returns showing address changes from California to Texas hasn’t been this high since the period 2006-07,” the Washington Free Beacon reported Thursday. “During that period, 34,078 returns were filed showing address changes to Texas.”

At the same time, only 21,391 Texans made the reverse trip.

These sobering numbers are backed up by U-Haul rates that show the demand for moving vans leaving California for Texas is much higher than the demand for vans heading in the opposite direction. (See chart.)

Not only is California losing its human capital, it’s also being drained of its businesses. Carl’s Jr. is leading the most recent wave out of the state. Two years ago it was Toyota, which said it was relocating “substantial parts” of its U.S. headquarters from Torrance, Calif., to suburban Dallas. In the last decade, as many as 9,000 businesses have fled the state.

So why has California become a cage to escape from rather than a destination that attracts? Simply put, it has too much government and it’s choking businesses and individuals.

The American Legislative Exchange Council says that California has the fourth-highest tax burden in the country. The state’s top marginal income tax rate ranks dead last in the country, says ALEC, and its top marginal corporate rate is not much better (40th). Its personal income tax progressivity is last.

ALEC also reports that California’s civil court system is among the worst and ranks 44th in economic outlook. Both of these facts are demoralizing for businesses.

ALEC further noted that only New York had a higher net domestic out-migration than California from 2004 to 2013, when 1,394,911 abandoned the Left Coast’s flagship state.

Last year, business location consultant Joseph Vranich wrote in a study of what he calls “divestment events” that “in California, costs to run a business are higher than in other states and nations — largely due to the state’s tax and regulatory policies — and the business climate shows little chance of improving,”

Vranich counted more than 1,5o0 divestment events in California from 2008 to 2014 but believes that number probably undercounts the actual sum by a factor of 5 to 1. So the real level of disinvestment is likely much higher.

Apparently, California lawmakers haven’t been paying attention. Vranich reported Wednesday that the state legislature is still considering “more business-bashing, job-killing bills.”

“We need only look at the newest summary of legislation that the California Chamber of Commerce issued yesterday,” Vranich wrote in his blog. “Seeing some of the shocking language in the bills . . . makes me wonder what planet Sacramento legislators came from, or perhaps I should say what solar system California voters came from.”

Vranich makes a valid point. The California voters who keep putting the same always-erring politicians in office are from some odd corner of the universe. But they’re not the ones leaving, and their continued presence is only going to keep the California exit ramp jammed with refugees.

Read more HERE

© 2000-2016 Investor's Business Daily, Inc. All rights reserved