Clarke Dryden Camper is Senior Vice President, Head of Government Affairs and Public Advocacy at NYSE Euronext, a...
California was once hailed as the supreme example of America’s economic vitality and entrepreneurial energy. Yet a pair of opinion pieces in Investor’s Business Daily and the Los Angeles Times label California “a bad bet for business.” So what’s going on in the Golden State?
According to IBD, a record 254 businesses left California last year or roughly five per week. The National Federation of Independent Businesses rates California’s tax climate the second-worst in America, with a corporate tax rate of 8.84% (the highest west of the Mississippi); the nation’s third highest income tax rate at 9.3%; the nation’s highest sales tax of 7.25% or higher depending on local levies; and the fourth-highest capital gains tax, which directly hits investors and entrepreneurs.
Writing in the LA Times, University of Nevada economist Bradley Schiller points out that California ranked 34th in real GDP growth last year and now has one of the country’s highest unemployment rates at 10.9%. Meanwhile, in its most recent ranking of “business friendly states,” Forbes advised investors to “forget about California.” According to Schiller, “Silicon Valley no longer has a monopoly on high-tech talent and innovation” and “Hollywood has to compete for movie locations with Utah and Morocco.”
Both Congress and the Obama Administration have made spurring small business startups a priority this election season – and a bill moving through Capitol Hill may help California and other states regain their entrepreneurial mojo (NYX has been very active in supporting this bipartisan measure). Last week, the House overwhelmingly approved legislation (390-23) that would make it easier for smaller firms to raise capital. Senate Majority Leader Harry Reid is promising to fast-track the measure and send it on to President Obama.