Two Dozen Companies Announce California Departures, Citing Higher Taxes

February 14, 2013

Joseph Bishop-Henchman

Joseph Bishop-Henchman

From KCRA Sacramento:

KCRA 3 has learned that 24 chief executives are flying to Phoenix, Ariz., to explore the land of lower taxes and a much friendlier business environment.

“We can deliver the mayors, we can deliver the CEOs, we can deliver the legislative support,” said Barry Broome, president of the Greater Phoenix Economic Council.

Broome launched his campaign to recruit California CEOs, one day after voters in the Golden State approved Prop 30 last November, and the campaign is working.

Broome said of those, 24 CEOs already have committed to leaving California.

California is a high tax state. They are fourth highest in state-local tax burden as a percentage of state income. The sales tax is the highest state rate in the country, and numerous county rates keep them in the top ten of state-local combined rates. Their individual income tax top rate of 13.3 percent is the highest in the country, with taxpayers paying high rates at even modest income levels. The corporate income tax is one of the highest in the country. Even the gas tax is the third highest in the country. Only on property taxes is California "low": 15th highest in collections per capita.

The Tax Foundation's annual State Business Tax Climate Index evaluates tax structures for business-friendliness, and the 2013 edition ranked California 48th, or third worst. The individual income tax ranked second to last, corporate income tax ranked 45th, and sales tax ranked 40th. (Property tax structure was a bright spot, ranking 17th best in the country.)

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.

A property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services.