California's latest economic recession – unemployment hit 11.2 percent last month, fourth highest in the nation – has regenerated our perpetual squabble over whether the state's high taxes and regulatory climate have rendered it inhospitable to job-creating investment.
A conservative organization called the American Legislative Exchange Council says that's exactly what's happened, rating the state 43rd in the nation in economic competitiveness and citing its high taxes and regulation as the reasons.
The organization's recent report, entitled "Rich States, Poor States," devotes two entire chapters to California, one of which contrasts the state with supposedly business-friendly Texas.
"California continues to increase regulations, raise taxes and spend profligately," says the report, co-written by economist Arthur Laffer. "Texas, on the other hand, has a pro-growth economic environment with a competitive tax system, sound regulations and spending discipline that will help Texas maintain its superior performance well into the future."
In that vein, Republican legislators have dreamed up a media stunt, an unofficial hearing in Reno this week, to publicize what they say is a flight of business to neighboring Nevada.
"California is experiencing an unemployment crisis as tens of thousands of our neighbors have lost their jobs," Assemblyman Dan Logue, R-Linda, said. "We are going to ground zero – Nevada – to understand why businesses have left California and how we can change our state's approach to prevent more from leaving."
There is, however, no empirical evidence of a massive business migration out of California to low-tax states such as Nevada or Texas, as superficially logical as that might seem to some.
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sACraMento BeE NA! /moonbat off