Assemblyman Hagman discusses California’s economic climate.
Unfortunately, The Clash’s 1982 hit single is ringing true with California’s businesses today. Senate and Assembly Democrats have released their respective budget solution which adds more than $6 billion in higher taxes and $9 billion in new borrowing. This comes only a year after the legislature passed a massive $12.5 billion tax hike on Californians, which was the largest tax hike in our state’s history.
The Democrats claim their proposals are about jobs, but nothing in their plans will do anything to bring to a halt more California businesses leaving to a less burdensome state. In fact, private sector jobs were ignored in their report as they promoted government jobs and so-called green jobs. We will continue to see an exodus of private sector jobs to other states that have lower taxes and regulations.
As a small business owner myself, I know firsthand how complex it is to comply with all the government regulations imposed by the Legislature. Combined with the high taxes and fees that each business has to pay, it is very expensive to retain jobs, much less create new ones. Sadly, my experience is similar to thousands of other small business owners who find it hard to compete in California. During the past 18 months I have found numerous business entrepreneurs, like the following three, who have shared their experiences about the punitive business climate in California. A) The CEO of an aerospace parts manufacturer in the San Gabriel Valley recently said that “Regulations, taxes, uncertainty about state leadership make California unlikely for future expansion.” He said they are expanding in Nevada instead where it is easier to create jobs. B) Another manufacturer of medical devices said that taxes are hurting their ability to grow and that Sacramento is not listening to their needs. C) Yet another CEO of a bakery business said that “California bureaucracy is endless” and seriously considering leaving the state.
With more than 2.3 million Californians unemployed, it is clear that the Legislature must make job creation a top priority. That means stopping the migration of businesses to other states and countries, and fostering a more welcoming businesses environment with less red tape and lower taxes. If we do not foster such an environment, more businesses and the tax revenues they generate will leave the state, which will leave less money for public services such as education and law enforcement. More businesses are sure to leave if the “raising taxes Democrats” get their way on a variety of things such as gas and income. This will make our budget problems even worse.
The problem is not that hard-working Californians and job-creating businesses are paying too little in taxes, as they already bear the seventh-highest tax burden in the nation according to the non-partisan Tax Foundation. The real problem is that we do not have enough Californians working and businesses thriving so they can generate tax revenue. In other words, California has a jobs problem, not a tax problem.
Right now, I am fighting hard to pass legislation that will make it easier for entrepreneurs to invest and create jobs in California. With more people working, we will see more products and services being bought, which will lead to more tax revenue to fund the public services we need. It would be a win-win situation that will turn our state around. Instead of focusing on what taxes need to be raised and by how much, it is time for the Legislature to focus on creating and retaining jobs in California. We need to make sure Clash’s punk-rock band lyrics don’t become the new mantra for this decade.