California has one of the worst public policy climates for entrepreneurship and small business in the nation. On the 2007 “Small Business Survival Index,” for example, California ranked a dismal 49th. Only New Jersey and the District of Columbia were more costly in terms of taxes, regulations, spending and other government-imposed or related costs.
But apparently Democratic legislators want to make matters even worse for California’s entrepreneurs and investors, and therefore, for the state’s economy in general.
The Los Angeles Times reported on July 9 that “Democratic lawmakers presented a plan late Tuesday night to impose $9.7 billion in new taxes on the wealthy and corporations to avoid the cuts to government services in Gov. Arnold Schwarzenegger's budget plan.”
Later, the story said: “Income taxes on families earning more than $321,000 would go up by 7.5%. Joint filers earning more than $642,000 would see an 18% hike.”
It was reported that Republican state legislators and Governor Arnold Schwarzenegger are opposed to tax increases. Republicans do have enough votes to block the budget from passing.
Keep in mind that California already imposes the highest personal income and individual capital gains tax rates in the nation. The story closed with the following point: “The wealthy ‘aren't locked in to being here in California,’ said Senate Budget Committee Vice Chairman Bob Dutton (R-Rancho Cucamonga).”
Indeed, California’s public policy climate already sends a very clear signal to entrepreneurs, investors and businesses in general that they are not valued, and they’d be better off moving elsewhere. That grim message would only become clearer if Democratic lawmakers get their way by hiking taxes even more.