[Source: Orange County Register Editorial Board] CNBC’s annual state-by-state “business climate” study is out. No surprise, we’re dead last — No. 50 — among the states for “cost of doing business.” Here’s an area where you don’t want to say, “As California goes, so goes the nation.”
Almost all of California’s business-climate problems are self-inflicted, as lawmakers try to balance conflicting interests.
Lawmakers, through various mechanisms, have significantly driven up the cost of energy. They began and renewed cap-and-trade, which the Legislative Analyst’s Office forecasts will raise gasoline prices in the years ahead — so the state can keep pushing its bullet train, which is heavily dependent on cap-and-trade funding.
They’ve imposed the nation’s highest state sales tax, highest income tax, and yet remarkably never seem satisfied with current levels of taxation.
In their 2019 State Business Tax Climate Index, the Tax Foundation ranked California as having the second worst overall business tax climate in the country.
But record revenues and a surplus haven’t been enough for state lawmakers, who have proposed a litany of tax increases this year.
Then consider the costs of doing business in a state consistently ranked by the American Tort Reform Association as the nation’s leading “judicial hellhole,” where businesses are routinely forced to fend off lawsuits.
Add in costs imposed by the California Environmental Quality Act, which desperately needs revamping, and you have a splendid mix of laws and regulations that would give even the heartiest business owner pause.
If Sacramento lawmakers have taught us anything, it’s that they cannot, they will not, surrender their central planning urges, which of course much be fueled by more and more taxes and manifest in greater laws and regulations of dubious value.
But the key to business formation is government’s ability to moderate its worst and costliest excesses.
Of course, there’s an extent to which California has and will continue to be able to paper over the many unintended consequences and negative consequences of poorly conceived public policy.
“California gets away with a horrible business climate because it’s got such strong industries,” Steve King, a partner at Emergent Research, told CNBC.
Indeed, California has many advantages over other states. But rather than use those strengths to facilitate even greater economic activity, California’s politicians have instead exhibited a tendency to take California’s advantages as a given and use California’s businesses as piggy banks for their grand visions.
Someday, we’d like to see California’s politicians realize that pulling back and letting markets work will yield more benefits over the long-term than perpetually using the force of government at every opportunity.
Source: Orange County Register Editorial Board
August 1, 2019
