Saturday, April 4, 2015

No, Low Taxes Are Not Good for Business

Short version:  Low-tax states are also low-service states, and Florida and Texas are perfect examples.  Business executives are not stupid; they know taxes are a small price to pay for decent roads, good public education, clean water and clean air.  Businesses may want to pollute with impunity, but they also want the state to clean up their mess.  Low-tax states are too poor.


So, Florida Governor Rick Scott tweeted this out (last month:

Funny thing. This piece in Bloomberg came out yesterday too:
There are plenty of reasons to presume that California must be a bad place to do business. The Tax Foundation says the state's tax structure is the third worst for business in the U.S. Forbes ranks California's business costs fifth highest among the 50 states and its regulatory environment the eighth most burdensome.

Why then does the market, where buyers and sellers determine relative value, show otherwise? California-based companies surpass their competitors in the U.S. by most measures of performance favored by investors.


Maybe high taxes and strong regulations don't daunt business leaders if well spent and well aimed. Places that prepare for big 21st-century challenges such as urbanization, climate change and globalization are likely to be the most successful. California companies lead the U.S. in confronting these risks with superior results for shareholders and bondholders. The corporate performance coincides with growing confidence in the state under Governor Brown, now in his fourth term. That's shown by the biggest four-year drop in the cost of state credit default swaps, a kind of insurance against bondholders' losses and a way to speculate on creditworthiness.

The exceptional performance of California companies helps explain why (with no official gross domestic product data available yet) the state would have the world's seventh largest economy if it were a country, bigger than Brazil's, which saw its GDP decline in 2014.

If taxes are really the bane of California existence, why aren’t they preventing rich people from making the state their primary residence? Some 123 of the world's wealthiest 400 people live in the U.S., and 28 of them, or 23 percent, are California residents, according to data compiled by Bloomberg. New York is No. 2 with 22 billionaires, or 18 percent, according to the Bloomberg Billionaire’s Index.
Go figure.

I happen to think that Florida is still a nice place. But if they keep electing right wing monsters like Rick Scott it won't be for long.
Tax the fuck out of corporations and the rich and use the money to make the state a place where business can thrive.

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