Wednesday, October 27, 2010

Texas vs California - Battle Of Economic Climate

On Twitter I read a snarky little tweet about Texas - that since it is the GOP that has essentially been in control, well, it's just an awful place. It was from the founder of a big name liberal web site. Couldn't be further from the truth but truth doesn't always prevail on the Internet. The blurb was especially entertaining due to recent articles from The New York Times and The Orange County Register. Opposite coasts, same conclusion. In comparing the economic climates of Texas and California, the State of Texas is the winner. Texas is open for business.

This is The New York Times:

That the two states are at odds is not surprising. California, the nation’s most-populous state, also has the largest economy, despite its recent problems, including chronic budget deficits and an unemployment rate of more than 12 percent. Texas is No. 2 in population and close behind California in economic muscle.

California’s problems have given Texans a chance to crow. Governor Perry, a Republican, lists a number of favorable comparisons between his state and California on his campaign Web site, including a link to an article from Investor’s Business Daily that “explains that Texas is leaving California in the dust.”

“Texas is leading the country out of the recession,” the article reads. “California is holding it back.”

The Orange County Register article begins: A study two years ago found that California substantially lagged behind Texas economically, based on the two states' taxes, regulatory policies and government spending. That study, performed by the Texas Public Policy Foundation, recently was updated. Not only does California continue to lag but, by comparison, it "has become even less competitive than before," the newer study concludes.

The study concludes that in five broad categories – taxes on labor and capital, overall tax and regulatory environments and government spending – Texas fares substantially better, while the two states effectively tie when it comes to taxes on "consumption" or sales taxes.

Californians are leaving that state and heading to Texas. The Texas Public Policy Foundation study provides a good yardstick for determining where California falls short. California's top marginal personal income tax rate is 10.55 percent and average income earner's income tax rate is 9.55 percent. But Texas has no income tax. California's top marginal rate on corporate income tax is 8.84 percent, compared to Texas' mere 1 percent. The study calculated California's "overall tax burden" to be $115.96 per $1,000 of personal income versus Texas' $94. California ranks 27 best among the 50 states in tort liability, while Texas ranks second. And total state and local expenditures per capita for California are $11,356 versus Texas' $7,763.

Excessive taxation and regulation stifle economic development. Texas nurtures a friendlier environment for personal and corporate income development.

The choice is just common sense.

1 comment:

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