California Regulations and Taxes Have Conséquences

California Governor Browns has been trading quips with Governor Rick Perry of Texas over the best economic model.  Brown preferring the California model, while Perry prefers the Texas model. Brown finds the California vs Texas comparison “tiresome”. The real question is which model do the facts support, California or Texas.

Reason Magazine has some insight:

There’s a reason Brown and company find the comparison “tiresome.” That is, more people seem to prefer the Texas model over the California model. That’s despite the real advantages that California historically has held as a refuge for people looking for open minds and social elbow room. Stephen Levy, director of the Center for the Continuing Study of the California Economy, insists, “If you look at the areas that are the most tolerant — the Bay area and Hollywood — you find the highest clusters of creativity and innovation.” That’s long been true, but it’s probably not enough in an era when Texas and California aren’t as far apart on the tolerance issue as they were in the past . . .

And, in fact, the Post points to Census Bureau figures showing that, last year, “63,000 people moved from California to Texas, while 43,000 in Texas moved to California.”

Just as important, money moved, too. Travis H. Brown, author of How Money Walks, points to IRS figures that track the flow of wealth from some states and to others. From 1992 -2010, California was a net loser of $45.27 billion in adjusted gross income. $6.02 billion of that went to Texas. Texas, on the other hand, gained $24.94 billion in AGI during those years, with California the top source for transfers.

California continues to raise the cost of doing business in California with the implementation of AB-32, the Global Warming Solutions Act, which so far has produced a $1 billion dollar slush fund for CO2 reduction. All this in the face of growing evidence there was no significant connection between CO2 reduction and global warming.  Texas business on the other hand are not burdened by AB-32 and the companion implementation laws and regulations.

Proposition 30 raised taxes on the richest California, yet another incentive for the movement of money out of the state. When you look at the map below, you can see that states with lower taxes are attracting people and money form the higher taxing states. California is a major source of those transfers, and Texas a major recipient.  I think the facts support Governor Perry’s economic model. The sad part is that the Texas model will continue to improve, while the  political nitwits in Sacramento continue to burden business and wealthy people with more regulations and taxes.


More on the money transfers HERE.

About Russ Steele

Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.
This entry was posted in AB-32, Climate Change, Jobs and Economy, Politics, Taxes. Bookmark the permalink.

7 Responses to California Regulations and Taxes Have Conséquences

  1. Todd Juvinall says:

    Here is the link to the Maddy Report. I thought it was well done. Arrow down to the fracking session.


  2. Todd Juvinall says:

    Russ, the fellow who was given a front page on the Union last week, the Solar Guy from Penn Valley, )he wrote a fracking book) is debating me on the Union’s comments section of the paper. He is totally in the bag against fracking. Here is the link to SB 4 on the new regulations. I just watches the “Maddy Report” this morning and the discussion was all about fracking. The eco guy was spouting the same old crap. They don’t know anything about fracking but they are against it.


  3. Sean says:

    Don’t know if you get over the Coyote Blog by Warren Meyers but if you do, the one today is a warning to anyone wanting to run a business in Ventura County, CA: Perhaps the most telling line is in the last paragraph. He was not near as concerned about high taxes on any profit he made, rather the ability to make any profit at all with the cumbersome regulations he faced.


    • Russ Steele says:

      I once traveled to Tahoe to meet Warren, and listed to one of his climate change talks. I had not been to his blog in several days. I agree the last sentence is most telling. He is not the only one suffering, but he is in a position to report the crap that small business have to face. Thanks for the link and the tip.


  4. Sean says:

    You might find this report written by a group at USC informative. It looks at the trends in school age populations in the state. This is an important parameter since business formation is correlated with changes in school age populations.
    If you look at the under 10 and the 25-45 populations, you see the biggest declines. (Exhibit 2, page 8).


  5. Russ Steele says:

    Easier to open in Siberia than California

    “Under the current U.S. business climate, regulatory and tax restrictions tend to curb otherwise dynamic entrepreneurial energy,” Puzder said. “We’d love to see more growth in domestic markets. Unfortunately, it’s easier for our franchisees to open a restaurant in Siberia than in California.”


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