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Monthly Archives: February 2013

If recent exchanges between Texas Governor Rick Perry and California Governor Jerry Brown are an indication of things to come, we could be in for a shootout rivaling an old one — this time for jobs. Admittedly it’s a stretch but let’s call this modern-day duel the battle of the TAXCorral.

As Hollywood’s Robert DeNiro says in Silver Linings Playbook: “there’s nothing more American than a Cowboy” and he’s up for an Oscar so it must be true.  Perhaps Moonbeam is the future but that tale has yet to be told.

For those living in the present, move over California, it’s now all about Texas dreaming.

All characterizations aside, the fact is that the two states couldn’t be more different philosophically.   While Texas actively recruits corporate expansions and re-locations, in November the voters of California raised the top state income tax rate on those most responsible for job-creation – wealthy investors, entrepreneurs, and small businesses.

Following Proposition 30’s passage the state’s top income tax rate is now 13.3 percent and many executives and entrepreneurs in that state are crying ‘uncle.’  Today in California, top earners pay more than 60% of their income to federal, state, and local government.   At some point the math just doesn’t work and it appears that tipping point has arrived as companies flee the Golden State in droves.

While Texas relies more heavily than California on sales and property taxes, Texas has no state income tax and a much more affordable cost of living.  The quality of life is also quite comparable — you can also play golf here about as often; Phil Mickelson won’t have a hard time finding a game and you can eat BBQ at the turn.

Texas by contrast keeps taxes low, regulations reasonable and, because the state must keep its budget balanced, has the money to spend on water, roads and energy infrastructure to keep up with demand, now estimated at 1,000 new citizens per day.

Texas is also spending money on corporate re-locations and start-ups.  The Texas Enterprise Fund provides incentives to big companies; the Texas Emerging Technology Fund invests in early-stage ‘disruptive’ technologies; the Texas Economic Development Act allows municipalities to rebate sales and property taxes to attract new companies, and the Texas Workforce Commission provides skills training.

Here’s another perspective from John Fund of the Wall Street Journal and National Review:

http://www.nationalreview.com/articles/340276/texas-trumps-governor-moonbeam-john-fund

Incidentally not all of California’s producers are leaving for Texas; their neighbors in Nevada also pay no state income tax and many are simply moving across one border, while keeping a toe in Cali waters.  And they, not the government, get to re-distribute that  13% of their own money at the casino if so inclined.

California used to be the destination state, a journey; a mythical place Americans could start anew.

They have now ceded that distinction to Texas, a safe harbor where innovators and entrepreneurs can dream big and be welcomed by state leaders.

I don’t think anyone believes that California doesn’t want to create jobs in the state.  But as a practical matter they’ll need to stop shooting themselves in the foot; their actions belie any other result.

In the meantime come experience the Texas Dream.  It’s 75 degrees in February, we may pay you to move, and you get to keep more of your stuff.

Craig Casselberry

512-762-7366

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