The Los Angeles Times points out that California placed 48th in a study of business-friendly states, trailed only by New York and New Jersey -- and that was the good news. A few weeks later, the Times reported even more dismal information.In The California "Austerity" Trap, Robert Upshaw points out that California's expected budget shortfall has mushroomed to $16 billion and in response, Governor Jerry Brown offered a plan that ups the top tax bracket rate by 3% for the next seven years and increase sales taxes by one-fourth of 1 percent for four years.
Leading with the news that Chief Executive magazine had named California the worst place to do business for the eighth year in a row, they went on to detail some of the reasons.
Its 10.9% unemployment rate is only lower than Nevada's and Rhode Island’s. A third of U.S. welfare recipients live in California, the report noted. High state taxes and bundles of red tape make operating a business in the state unaffordable to many companies, critics say.
Last year, 254 California companies moved some or all of their work and jobs elsewhere -- 26% more than 2010. Most chief executives in Silicon Valley said they won't expand in the state, according to the survey.
In response to these woes, California's solution is to attack its underground economy, estimated by the state at between $60 and $140 billion, rather than lowering the tax and regulatory burdens that have driven that substantial portion of the economy underground, as Reason reports.