Why Californians Go To Texas

DEC. 2, 2010

When will enough be enough for California? How much longer is California going to roll over for Texas? Or North Carolina, Nevada, Arizona, Oregon, Tennessee or Utah? While these wonderful states are cherry-picking our surviving businesses, state legislators are still talking about expanding entitlement programs and ways to increase taxes to cover the growing state deficit.

A recent report by the Texas Public Policy Foundation found that the “most significant competitive advantage Texas has over California is that Texas has no income tax where California has a steeply progressive income tax.”

The biggest problem for Californians is that we are taxed through our earlobes (and other parts), and it’s only getting worse.

The study, authored by economists Arthur Laffer, Steve Moore, Donna Arduin and Wayne Winegarden, lists the nine states with the lowest and highest marginal personal income tax rates – California is one of the highest at 10.55 percent. New Jersey, Hawaii and Oregon are higher but only by 10.75, up to 11 percent.

It is evident that the states with low tax environments and pro-growth policies are benefiting greatly, and are better equipped to survive the economic volatility in the country.

A few weeks ago, on a rant and fed up with the cost of living in California, I searched for the most fiscally conservative counties and states in the U.S.

The Daily Caller made my research fairly easy as it had recently ranked the most “conservative-friendly counties” in America 1-100. Williamson County, Tenn., won the top billing.

The criteria included: How counties have voted in the past two presidential elections; median household income, factoring in cost of living; home-ownership percentage; married family percentage; civilian veteran percentage; state unionization laws; whether a right-to-work state or mandatory union state; state tax burden–state income taxes, factoring in available deductions; state concealed weapons laws; ease of carrying weapon legally; state weekly religious attendance, as measured by Pew; state abortion laws, as measured by Americans United for Life; and even “intangible” things such as a long conservative history, an ingrained military culture and prominent right-wing politicians.

While I might not have included all of these categories in my search, the overall results were interesting.

Aside from having the most guitar-shaped swimming pools per square mile, the Williamson County local economy consists of a high rate of entrepreneurs at 21 percent, and enjoys great fiscal responsibility with a AAA rating from Moody’s. The county reports balanced books, and has nearly two-thirds of the operational budget going to public education with winning results – a 92 percent to 95 percent graduation rate in high schools.

Denton County, Texas, made the Daily Caller top 20 list as well, known as “a hotbed for affluent conservatism,” crediting Congressman Dick Armey, a free-market enthusiast and economics professor, with tripling the population of the county during his 18 years in office.

The TPPF study reported “Texas’ economic strength can particularly be seen in job creation. According to employment data released last month by the Bureau of Labor Statistics, Texas created 129,000 new jobs in the last year—over one-half of all the new jobs in the U.S. In contrast, California lost 112,000 jobs during the same period.” California’s total tax revenue growth may have been up, but was extremely “volatile and erratic, due to the state’s steeply progressive tax code.”

Even though California can expect revenue “riches” when economic times are healthy, California’s legislators always spend the money on pet projects and special programs. And then the shortfalls hit when the economy turns downward, leaving the entire state in a deficit.

None of this is news to California’s residents as we are living in one of the most difficult economic times in the state’s history. The study did however bring to light the dangerous policy tangle of environmental and land use regulations.

California was once known not only as an agricultural leader, but an economic leader. Somewhere along the way, the environmental lobby began dictating terms to the vast agriculture business in the state, and did so through the Legislature. Those regulatory interferences expanded to all business in the state and California became a state of “us and them” businesses – either an “enviro” or “big business.”

The study acknowledges that the rise in California’s regulatory climate has dramatically affected all trade and business in the state. Despite the fantastic natural resources indigenous to California, “It can cost $75,000 to get state approval of a timber harvest plan even before a tree is cut.” Whether building homes, highways or any other structure, the high costs of labor and materials in California act as a “powerful disincentive to business expansion and job creation.”

By contrast, there are businesses and jobs in Texas that don’t even require licensing. In Texas, one can have a dream, and just create a business, like the good old days.

The per capita personal income in Williamson County was $55,717 in 2008. Denton County reported $58,216, with Sacramento County coming in at just $35,857.

But the overwhelming evidence that Tennessee just may be one of the most fiscally conservative places in the country to live is that a legislator, on average, is paid $15,603 annually. A Tennessee hotel manager makes significantly more at $35,128, as does a food service manager at $41,294.

A California legislator is paid $95,291 annually.

Trying to compare Sacramento County’s economic jobs and business development was a real chore since locating the economic development category on the county Web site was not easy. It was listed under “Related Offices,” whereas the Tennessee county websites prominently display its economic development pages.

Tennessee used to say “follow me to Tennessee,” and now calls itself “America at its best.” It appears to be true, at least economically – and if you like guitar-shaped swimming pools.

Deep in the heart of Texas, economic performance is king, taxes remain lower and the budget is balanced without raising taxes, according to the TPPF study.

California, once the Golden State, claims you can “find yourself here.” Unfortunately what most people in California find are empty wallets, empty bank accounts and a growing, and well-paid entitlement government.

–Katy Grimes