by Robert Reich
I keep hearing California is a terrible place to do business. The Tax Foundation rates its taxes as the third worst for business in America; Forbes ranks California's business costs fifth highest and its regulations (especially environmental regulations) the eighth most burdensome. These same sources rank states like Kansas as among the best to do business.
Yet California-based companies are surpassing their competitors in the U.S. by almost every measure favored by investors. Bloomberg reports that over the past four years, California companies in the S&P 500 have delivered returns of 134 percent (the closest big-state challenger is Florida, whose companies have an 82 percent return). They’ve also outperformed the S&P 500 by a margin of 23 percent. Tech companies in the state account for 52 percent of all tech company sales in America.
Kansas, meanwhile, is hitting the rocks.
How can California have some of the highest business taxes and regulations in America, and the most successful businesses? Because California has used its tax dollars to invest substantially in higher education, infrastructure, and basic R&D – the building blocks of the economy. And its regulations have fueled innovation, especially in alternative energy. (And its climate doesn’t hurt.)
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