its resiliency and unbreaking ability to not only bounce back, but to also flourish and succeed. California in the crosshairs Admittedly, there are more regulations on California businesses than in many other states. And to some degree, California’s status as a liberal enclave— politically, culturally and economically—has long
index measures 15 state policy ‘variables,’ such as top marginal income tax rates, property taxes, public employees per capita, state minimum wage, right- to-work law and whether there’s an estate tax.” In keeping with the Laffer Index’s conservative bent, what a state presumably has to do in order to rank high in all these factors is maintain low taxes, keep government small, practice anti-union policies and jettison estate taxes. Predictably, this index’s ranking of California is rather dismal. Although the state’s Economic Performance Rank comes in at a respectable 19th in the nation, another key measure of the index, the Economic Outlook Rank, places California near the bottom of the country, at 48th. That assessment begs the question a recent headline in the Los Angeles Times asked, however. “If California is such an ‘anti-business’ state, then why is its economy booming?” According to the Times, although several business-assessment measures (including the Laffer index, with its biases) label California as one of the worst states to do business in, it’s these measurement tools’ criteria that are faulty. In fact, the four states cited as the “friendliest” and “most successful” states in which to do business—Florida, Tennessee, North Carolina and Texas—all fared worse in terms of state economic growth than California. California actually outpaced all these states, often by large margins. The Times article sums up thusly: “Many of the [critical studies’] particulars don’t have much to do with economic potential in the real world. The rankings favor states with low taxes and little regulation. They give states high marks for low minimum wages and
made it a target for conservative pundits who’ve taken aim at this regulatory burden. We’ve all heard about businesses leaving the state in record numbers. For instance, a June 2023 report commissioned
California’s economy isn’t only the largest of any state in the country, it’s also is the largest sub-national economy in the world.
by the Los Angeles Area Chamber of Commerce stated: “…businesses continue to leave California… for more business-friendly states because of the lack of affordable housing, cost of living, high taxes and stringent regulatory environment.” But the question of whether state policies affect, negatively or positively, California’s business climate can draw even the most astute policy wonks into a deep rabbit hole. Consider, for example, the American Legislative Exchange Council (ALEC), deemed one of the preeminent “business-friendly” think tanks in the country. Funded in large part by the libertarian Koch Brothers, ALEC’s “Laffer State Economic Index” is considered a key measure of conservative economic thinking and reporting. As described by the Los Angeles Times, “The [Laffer]
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IN YOUR CORNER ISSUE 16 | 2024
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