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Thursday, July 23, 2009

Who Will Win the Nevada-California Battle for Businesses?

The July 17 New York Times an article titled “Nevada Sees an Opening in California’s Troubles.”

It tells the latest chapter in the war between the two states over where businesses should locate. It was reported:

The president of the nonprofit Nevada Development Authority, A. Somer Hollingsworth, donned a tinfoil hat for part of a speech in which he told local business executives and politicians that California’s excessive government had led to its near-bankruptcy.

“Nobody’s really working there — everybody’s a recipient of some kind of state program,” said Mr. Hollingsworth, whose organization’s mission is recruiting companies to the Las Vegas area and whose talk was entitled, “California Has Lost Its Mind and Las Vegas Is Providing Psychoanalysis.”

After reciting Nevada’s favorable attributes — no personal or corporate income tax, lower sales taxes than in California — he asked, “Why would you not move?”


Indeed.

While both states are having serious economic troubles, the mess in California is far worse than in most places in the nation. And the basics in terms of tax and regulatory policies coming into the current situation was far more favorable in Nevada than California.

On the latest edition of SBE Council’s “Small Business Survival Index,” which ranks the states according to their policy climates for entrepreneurship and small business, Nevada ranked second best. Meanwhile California was second worst among the 50 states.

Who is winning and will continue to win the battle for business between Nevada and California? It’s not really close.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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