Republican Myth: Businesses Leave State Because Of Taxes

Republicans like to claim that businesses leave California because of having to pay taxes.

I used to own and run a business, and I have some news for Republicans:  Businesses only pay taxes on profits.  You don’t pay taxes unless you are making a profit.  Paying taxes means you are making a profit.  Making a profit is a good thing, and California businesses pay a small percentage of the profits to the state to help cover the expenses that enabled you to make that profit.

I’m not sure how many different ways I can say it.  You pay taxes after you make a profit.  At the end of the year you add up your revenue and you subtract your expenses and other deductions and then you know what your profit is.

Oh, one more thing for the slower-thinking Republicans out there: profits are a good thing, not a bad thing.  And when you are making a profit the last thing you do is pack up your business and leave behind the circumstances that enabled making that profit.

I understand that Republicans hate government and are enraged by the idea of actually giving something back to the community to help pay for the roads, bridges, courts, police and fire protection, educated citizenry and the other parts of the state’s infrastructure that created the environment that led to the ability to make a profit.  Yes, they hate that.  I understand.

But the fact is that businesses do not pack up and leave when they are making profits.  So if Republicans want to trick people into supporting tax cuts for the big companies that shelled out so much cash put them in office they really do need to come up with better stories than trying to claim that businesses pack up and leave the state because they are making too much profit. 

5 thoughts on “Republican Myth: Businesses Leave State Because Of Taxes

    Toyota May Close Calif Facility
    While Expanding Indiana Plant
    According to the San Jose Mercury News, “one of the Bay Area’s largest manufacturing employers, Toyota Motor said Friday that it may end production at the giant NUMMI auto plant in Fremont, now that longtime partner General Motors has decided to abandon the joint venture that runs the facility.” See: Toyota says it may shut down Fremont’s NUMMI auto plant. Meanwhile, Bloomberg News reports that Toyota plans to spend about $500 million to upgrade an Indiana SUV-assembly plant, its biggest single such investment this year. See: Toyota Plans to Spend $500 Million on Indiana SUV Plant Revamp.
    In fact, lawmakers are trying to create tax breaks and incentives to keep Toyota,0,1285487.story
    “We work with hundreds of outside agents, consultants, independent contractors and support services — many of whom pay taxes to the city of Los Angeles. This spurs a job-creating ripple effect on the city’s economy. Yet I suspect many companies like ours already have quietly left town in the face of the city’s taxes and regulations. This would help explain the erosion of jobs.”
    I can’t help reach the conclusion that California has a very unfriendly business climate, of which taxes are a part
    California’s 2009 Business Tax Climate Ranks 48th

  2. Well you are describing Toyota playing two states against each other, demanding a bribe to open a plant there or keep it here.
    They can get away with this because they are so big and employ so many people that they can extort these payments.
    Your position seems to be that it is “friendly” to offer money to companies when they make threats like this. How do you feel about the companies that do this?
    I wonder what the state’s budget situation would be if ALL corporations managed to get cash payments like Toyota is trying to do.

  3. look its not just taxes that are causing businesses to leave its the entire business climate in california. regulations, fee’s and yes, TAXES are all part of the problem.
    you keep reiteration that “why would you leave if you are making a profit?” i will counter with the question ‘why wouldn’t you leave for lower fees less stringent regulations lower taxes and greater profits?’
    if you want to stick to the talking point of “if your being taxed your making a profit and you dont leave if your making a profit!!!” then i hope that turns out well for you.

  4. Once again:
    1) No one has yet been able to name any businesses that have actually left because of taxes or regulations.
    2) Taxes are on profits. Why would a business leave if it is making a profit?
    3) If a business leaves this is an opportunity for new businesses to take their place.
    4) Why shouldn’t the citizens be able to make the rules under which businesses must operate?
    5) The argument that businesses leave because of taxes is just obvious nonsense. It is similar to the argument that rich people will “stop working” if they are taxed, and we will be worse off because we don’t have their “contribution” since they are somehow so superior to the rest of us peasants that others won’t just do the job instead. Come on. If anything people work harder if they feel they need to take home the same income.

  5. Cal-Trol left California. they move their offices, warehouses, and engineering group to Nevada. All they left in California was the salesforce and field engineers.

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