Tracking Republican Myth That Business Are Leaving Because Of Taxes

I looked around and found that “businesses are leaving the state because of taxes” is one of those drumbeats that the corporate conservatives are using.  (Also, FYI the wealthy are leaving, too, parking their yachts in Salt Lake I guess.

I wrote about this myth the other day
, basically you pay taxes on profits and you certainly don’t pack up and leave profits behind.  I wrote,

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.

So I looked around for “businesses are leaving the state” articles.  Here are a few:

A Republican member of the Assembly writes, Governmental Restrictions, High Taxes Driving Businesses & Jobs Out Of California
Oops, the example company didn’t leave, it started in Nevada, and it
wasn’t because of taxes it was because they wanted “freedom” to dump
toxins into the environment.

Businesses and wealthy individuals flee state because of taxes.
Oops this is another company that started in Nevada.  This time it was
an income tax avoidance scheme where Californians set up the company in
Nevada – but still live here.  So it’s a PO box, not employees, etc.
This one quotes a Republican Party official,

“The high cost of living that continues to
force Californians out of state should serve as a powerful reminder of
the effect high taxes are having on our society,” said Ron Nehring, the
Republican state party chairman.

But doesn’t give any examples, and in fact shows how California has very favorable business conditions, credits, and is the only state that doesn’t ask oil companies to pay for the oil they take.

California’s High Taxes and Burdensome Regulations Drive People and Businesses Away — scary title, lots of scary words, but no examples of businesses actually leaving the state.

Another Company Leaving California because of High Taxes, Regulations  – Oops, this one is leaving the state because they want to pollute the air, not because of taxes.  Nice title, though. Scary.

We went through a flurry of this a few years ago, too.  Did any leave then? Let’s see what we can find.

Companies Can’t Leave CA Fast Enough – A title insurer left the state.  The 2003 article doesn’t explain why but mentions retail energy rates.  Remember Enron, Bush, all that?

California proves too costly for departing businesses,

Coast Converters is spending $800,000 to move
to Las Vegas, but the Los Angeles plastic bag manufacturer will save
enough on workers’ compensation, electricity and other costs to recover
that in less than a year, CEO Mitchell Greif says.

“It’s really an unfair business practice to
allow companies to move to Nevada and sell into California,” Greif
says. “But I’m doing it.”

Nope, not taxes.  And how do you like living in the desert, Mitchell?  Another 2003 electricity-costs thing.  You want deregulation?  Deregulating energy costs worked out great, no?

Nation’s Business.  Oops, the headlines are misleading, they are leaving because of costs.  Yes, it costs more to live here because people are coming here, not leaving.  Also,

… 10 percent of the 90 Southern California companies responding said they
“definitely” plan to move some or all operations from California within
a year, and an additional 13 percent said they would “probably” do so.

OOPS, this one is from 1993, before the huge business boom.  Sorry.  I guess all the businesses left California.  Oh, wait…

Wait, here are some more articles:

New York’s Taxes Send People and Businesses Out Of State — Maybe they’re coming here.

Are Millionaires Leaving Maryland to Escape Higher Taxes? — Maybe they are passing California’s millionaires going the other way.

Leaving Oregon, and its taxes, behind

Executives say firms may leave state if computer services levy is not repealed (Maryland)

Poll shows many mull leaving state (Buffalo)

NY’s High Taxes Drive Small Business Away, Too

I guess all the businesses are leaving ALL the states!

22 thoughts on “Tracking Republican Myth That Business Are Leaving Because Of Taxes


  2. “I looked around and found that “businesses are leaving the state because of taxes” is one of those drumbeats that the corporate conservatives are using.”
    It couldn’t possibly be because it’s true? Do you live under a rock?

  3. I read the article. The bottom line is businesses are leaving, have left and will leave…why is that?

  4. As a small business owner I know personally how the state makes it hard on me. From the State Board of Equalization to the AQMD, the local Fire Dept and city fees licenses and permits, not to mention the PROJECTED taxes I have to pay. There seems to be this overwhelming desire to stop anyone from taking risks and trying to become wealthy from hard work. Every business owner is forced to “show” as little profit as possible as to shelter him/herself from TAXES. I know a few people sitting and waiting for their disability check to arrive when I know they could work. What about giving a person on unemployment a task to do every week until they find work. Like cleaning up the parks, beaches etc. Better yet why not tax people on what they buy instead of what they earn. All the drug dealers, shady businesses anyone avoiding taxes still buy things and no taxes for saving your money(which will eventually get spent).

  5. Dave Johnson – What do you do for a living? Because you have no idea what you are talking about. Just to point out one of many examples on how bad it has become here. Take CARB’s AB32 for instance. Over the past two years CARB has developed new emission standard for trucks that will effectively eliminate the small/medium trucking companies in this state. These new rules are estimated to cost the transportation industry is about $6 billion to $10 billion over the next six years. This is money that would have normally not been spent on this and instead could have been used to hire new workers. Add this on top highest combined taxes of any state. No that no other state has this rule. The result business’s will leave. This reason alone will do significant damage to California’s economy. Worst part is that the consultant responsible making the recommendations for this rule was a known fraud had no real credentials or real facts and still the head of CARB pushed this job killer rule through the board anyway. So check yourself and start you own business so you know what hell you are talking about.

  6. I own a small company with a few employees. I’ve had 18 hour days trying to keep it afloat. Worked weekends, and when I was on the road and finished a long day, I went back to the hotel room to plug away on the computer to catch up from being behind. Now I’m told if and when I do well, I need to pick up the tab for others. I have told my wife I am ready to leave this state. The cheering on election night solidified my resolve. It won’t happen today, but when the opportunity comes, I’ll take it. And I’ll walk out on those who voted to pass me their bill.

  7. Dave do you live in CA? It’s almost as if this guy is really a fiscal conservative trying to make fiscal liberals look stupid. I recommend a couple things for you before you start typing on subjects you obviously know little about: 1. Get a real job in CA or even better, start a business in CA. 2. Go back to school and learn what the Laffer Curve is (economics 101).

  8. I run two businesses. One a consulting company with reps who consult all over and develop and another a online commerce company. Both fairly easy to move and not tied to the local economy. We are now in process of moving both companies out of the state. The profit tax taxes us in a way that makes it harder to compete with other states. If the tax was a sales tax we could easily pass it on to the consumer as a sales tax. as a profit tax it becomes a hidden tax that affects everyone, even those out of the state that work with us. leaving the state to a sales tax based state lets us stay interstate competitive.
    Although we do not reply on middlemen. Our clients in Oregon do, and they are considering how they can compete interstate when multiple layers of the supply chain from Oregon suppliers are all going to be taxed at each step. In the end the cost all gets passed on the the consumer. But with taking the layers of commerce it is Oregon citizens that loose.

  9. Each city has specific things to offer but how are you to know who’s the best? We’ve done a few searches for companies looking to leave California. We put out a blind search to 450 communities around the US to find who has the best offers in the following:
    1. Tax structure
    2. Real estate options (subsidized and otherwise)
    3. Non-dilutive funding
    4. Debt buydowns
    5. Education and social structures
    6. Transportation
    7. Supporting business communities to tap into
    California is not competitive in any of these categories. There are plenty of incentives out there but each city has their own goals. By casting a wide net we can find who’s most aggressive. Recently we found a medtech company a building and millions in cash in a state that has no corporate or personal income tax.

  10. Please move, if you can’t make it here in California. That will make room for companies who are tough enough to compete, like Tesla Motors who are locating in Fremont, CA.

  11. Obviously, Mr. Johnson has ZERO economic training or knowledge. If he did, he would understand that companies seek to MAXIMIZE their profits, and MINIMIZE their costs. If a company can achieve HIGHER profits, and LOWER taxes in a different state (e.g. Texas) they will not hesitate to move their operation.
    Perhaps Mr. Johnson should leave the discussion of economics to those who actually know what they are talking about, and go back to being a liberal shill.

  12. Bob would benefit from reading Mr. Johnson’s bio.
    Also, the post is about how there aren’t any companies that actually leave the state. Perhaps Mr. Bob could cite a few examples.

  13. Really, Mr Johnson? No companies actually leave the state because of the taxes?
    Published: April 24, 2009 3:00 a.m.
    Why do businesses leave California?By BRIAN JOSEPH
    The Orange County Register
    RENO, Nev. – With the economy shrinking in California, a dozen GOP state lawmakers met here Friday to hear why former California businesses have relocated to Nevada.
    “We think we know (why), but we want to hear it from the horse’s mouth,” said Orange County Assemblywoman Diane Harkey, R-Dana Point, referring to California’s high taxes and stringent regulations. “I think that businesses are an endangered species (in California).”
    California vs. Nevada
    How does our state compare with Nevada on taxes?
    CA: 3rd worst
    NV: 3rd best
    CA: 8.84 percent
    NV: none
    CA: between 1 percent and 9.3 percent
    NV: none
    CA: 1.5 percent
    NV: 0.63 percent
    *Among the 50 states, as rated by the nonpartisan Tax Foundation
    Source: Assembly Republicans
    Joining them was Nevada’s Republican Lt. Gov. Brian Krolicki and at least one Nevada Republican lawmaker, who were said to be there because they wanted to learn what drives businesses out of California and how to avoid doing it themselves.
    “I have great respect for you people in California,” said Krolicki, who is also chairman of the Nevada Commission on Economic Development, “but you make my job easy sometimes.”
    Attendees heard from more than a dozen businesspeople who complained of high workman’s compensation insurance, “predatory” regulators, an unfriendly business climate, a “never ending paper trail of business forms,” exorbitant utility expenses, fees, taxes, quality of life and overpriced overhead.
    Randy York said he moved his polyurethane manufacturing business from Huntington Beach to Reno, Nev. in 1987 because he was tired of being “hammered” with regulatory fees from the fire department, the health department, the state Environmental Protection Agency, the California Division of Occupational Safety and Health and the South Coast Air Quality Management District.
    He said it got to the point where he was paying $2,000 or $3,000 a quarter on fees – for company of 20 employees.
    “They were killing us with fees,” he said. “Fees, fees, fees.”
    Alan Jurkonis, president of a company that makes fire hydrant and gate values, described the “death by thousand cuts” that led his business to leave Fresno for Minden, Nev. in 2007. Shipping to Southern California was cheaper from Nevada than Fresno, land was cheaper too. There wasn’t a reason to stay, he said.
    Steven Patmont, president of the company that manufactures “California Go-Ped” motorized scooters, said his company left California for Nevada because California doesn’t appreciate business. He described how California regulators hit him with hundreds of thousands of dollars of small fines even though his company has a stellar safety record.
    “Leave me alone,” said Bill Miller, who manufactures racecar parts. Miller told the panel he moved his company from Harbor City to Carson City, Nev. in 1993 to avoid the hassles of California’s regulators, who he said sided with disgruntled employees rather than honest businesspeople.
    “I shouldn’t have to fight these things,” he said. “I’m a truthful person.”
    Much of the hearing was devoted to bashing state regulators like the California Air Resources Board and CalOSHA, but speakers also said they were glad to be rid of California’s traffic and crime. The complaints, however, were largely about the business climate.
    “I think it’s overwhelmingly the business stuff and not the quality of life,” said Assembly Republican Leader Mike Villines of Clovis when asked why he thought businesses leave California.
    Villines said he was disturbed to hear so many speakers say that no one from California tried to convince them to stay while Nevada officials have helped businesses scout potential factory sites and have generally made themselves available to business people. Villines said the testimony clearly indicates California isn’t business friendly.
    “I’ve heard this over and over again,” said Orange County Assemblyman Jim Silva, R-Huntington Beach. The Assemblyman said Friday’s testimony didn’t come as a surprise, but it was important nonetheless because it gives lawmakers ammunition to argue against higher taxes and more stringent regulation.
    “I think this will be referred to in committees and on the (Assembly) Floor in arguments (for some time),” Silva said.
    Maybe you could explain that to Randy York? Or Alan Jurkonis? How about Steven Patmont? Or Bill Miller?
    These people ALL moved their companies from California to Nevada because of high taxes, fees, and anti-business regulation from 1993 to 2007. The article is from 2009. Is it your contention that the cost of doing business in California, which JUST passed their version of “Cap and Trade” is actually decreasing?
    So, Mr. Johnson, either you are exceedingly stupid, or a liar, when you make the proveably false claim that “there aren’t any companies that actually leave the state.”
    (btw, I could certainly find many more examples of business leaving California because of the high cost of doing business there. You could find the same examples if you would pull your head out of the sand long enough to use GOOGLE. It’s just that easy.)

  14. BTW, Dave. Here is an ACTUAL ECONOMICS PROFESSOR, who disagrees with YOUR contention that companies are not only NOT leaving because of high taxes, they aren’t leaving at all.
    Interestingly enough, He actually has his BIO posted on his website. Yours seems to be strangely absent from this one…..
    Wonder why that is? Do you have A degree in Economics? (He has 2, M.A. and Ph.D., as well as an MBA). Do you have anywhere close to the credentials he has? If not, why would ANYONE afford you more credibility on economics topics (including your post about taxing the rich) than someone who actually makes his living in the field of Economics?

  15. Bob,
    You quotes a lot of Republicans SAYing that businesses leave the state because of taxes. And you cited ONE that says they left because they don’t want to stop polluting, and one that doesn’t like it that California protects worker safety.

  16. No,Dave. This is yet ANOTHER LIE from you. I posted an article wherein 4 business owners gave THEIR reasons for leaving the state. All of them left because of high taxes and fees and an unfriendly business climate. Another lie posted by you, which is easily refuted by actually reading the article I posted. I also note you ignore the second post about an ACTUAL ECONOMIST who disputes your bullshit.
    That’s all you can do, is lie and ignore, because you certainly have NO FACTS to back up the garbage you are spewing.
    Remember, DAVE. RIF.
    BTW, I also noticed you refused to answer the simple question of whether or not you actually have a degree in Economics. I’ll make it easier. Do you have ANY degree from ANY accredited college or University? Or are you simply another braindead liberal spewing the talking points that you so glibly recive from your superiors in Sacramento?
    My guess is that you don’t actually have A degree, much less one based in the Economic or Business disciplines.
    If you are actually a legislator in California, it is relatively easy to understand why your state is going down the pipe like a quart of DRANO.

  17. There are a lot of companies leaving or expanding outside California. However it isn’t nearly as simple as “taxed too much” or “too many regulations”. I looked at a blog by a guy named Vranich who has long lists of companies leaving California supposedly for its anti-business policies. When I investigated each of those companies in-depth, I found that companies left (1) because another state offered incentives, i.e. no interest loans that needn’t be repaid if the firm hired xx amount of employees, (2) they moved a small portion of their operation to a non-tax state so they could claim that location as headquarters & not have to pay tax in Calif despite having the bulk of their business still here; (3) they moved to ultra-conservative states that either have no environmental regulations or lax oversight/minimal penalties for big polluters – usually southern states desperate for jobs; (4) many of the firms listed left in the early to mid-90’s when the state was in a recession.
    In fact, the more I researched, the more I found that people have been making the claim for California’s death spiral since the 1980’s. They blame the state budget deadlock on Democrats anti-business, overspend mentality. This is particularly funny in light of the REAL reason for that state’s massive deficit – the people’s overspending. One guy on this post complained about someone able-bodied claiming disability – ok, so what? What’s that to do with the state? Why don’t you turn him in if he’s able to work? You & your Republican boyfriends don’t want any more state workers which is why there are so few investigators to stop such abuses. But let’s not overlook the biggest crime against the state’s budget – far less property tax revenue. That’s brought to you by the greedy public, you know, the bank teller making $30,000 a year who feels entitled to a $500,000 home but has no way to pay for it so she walks away. Let’s not forget the 100+ ultra-wealthy who over $100,000,000 in back taxes.
    Lastly, let’s not forget the $5 billion+ we spend on illegal hispanics in hospitals, welfare, and forget about how much private charity. The children they come here to get schooled – on the backs of Americans who did pay their taxes – are a huge drain: Less than 1/2 speak even passable English, more than 1/2 will drop out of school by the time they’re 16, and about 30% will have children before they’re 20 – despite having no job or job skills & unable to speak English.
    You can all b@#ch all you want about economics degrees but the facts are simple: More unskilled labor coming in creating more crime defaulting on more homes making more communities a 3rd world country while companies pay good employees less-than-livable wages and circumvent labor & environmental laws (or hadn’t you noticed that corporate revenues have skyrockted the past year while employee wages are hovering below 2001 levels). THERE is your recipe for Californi’a destruction. With greedy CEOs forcing people to work ridiculous hours for ridiculous pay & those people can’t even go to the hospital because it’s too jam-packed with illegals coming from Mexico for free health care – all the while Republicans sue the feds to stop free health care for actual Americans, no WONDER we’re going to h#ll in hand cart!!!!!
    PS – If any of you had even a portion of a brain, you’d look at this argument takign place in EVERY OTHER FREAKIGN STATE IN THE NATION. They ALL complain that someone is stealing their business & jobs. You are just pathetic.

  18. Hilarious. Yes, corporatons are the end of us. Nevermind 65% of our taxes go to entitlements with nowhere to go but up. Corporations are one of the biggest employers of the middle class. Wht would the libs want them out?Businesses leave left and right. The libs are in denial, and the states have always tried to lure here and there. The difference now? They’re lured out of here instead to here. When AB32 the cap and tax hits california and energy skyrockets, the business climate will really suffer. Utopia it isn’t, and the class warfare garbage is just that garbage, especially when the libs let in all the illegals, then they complain about wages being lowered. Fools..

  19. It’s so unbelievable how anti-business you are. 90% of most companies are not crooks. Liberals blow out 0f portion when there are bad or greedy corporations and forget our country is based on free enterprise. I don’t care if oil companies make billions, it’s the net profit that counts. Texas oil company is spending 45 billion to develope new well there. Much of profits goes to people mutual funds and 401k and other things. Stop promoting Marxism and learn more what businesses are going through. 30 million dollars a day is what California is paying just to pay the interest they owe. Almost a dozen businesses a week are leaving California. When will democrats finally learn more taxes is not the answer?

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