Republican Myth: Businesses Leave CA Because Of Taxes

This post originally appeared at Speak Out California

Republicans like to claim that businesses leave California because of having to pay taxes.

I used to own and run a business, and I have some news for Republicans:  Businesses only pay taxes on profits.  You don’t pay taxes unless you are making a profit.  Paying taxes means you are making a profit.  Making a profit is a good thing, and California businesses pay a small percentage of the profits to the state to help cover the expenses that enabled you to make that profit.

I’m not sure how many different ways I can say it.  You pay taxes after you make a profit.  At the end of the year you add up your revenue and you subtract your expenses and other deductions and then you know what your profit is.

Oh, one more thing for the slower-thinking Republicans out there: profits are a good thing, not a bad thing.  And when you are making a profit the last thing you do is pack up your business and leave behind the circumstances that enabled making that profit.

I understand that Republicans hate government and are enraged by the idea of actually giving something back to the community to help pay for the roads, bridges, courts, police and fire protection, educated citizenry and the other parts of the state’s infrastructure that created the environment that led to the ability to make a profit.  Yes, they hate that.  I understand.

But the fact is that businesses do not pack up and leave when they are making profits.  So if Republicans want to trick people into supporting tax cuts for the big companies that shelled out so much cash put them in office they really do need to come up with better stories than trying to claim that businesses pack up and leave the state because they are making too much profit.

Click through to Speak Out California

One thought on “Republican Myth: Businesses Leave CA Because Of Taxes”

  1. the myth that higher taxes on the wealthy takes a bite of their entire income, when in fact it’s only from highest bracket that their earning fall into. DaveJ has addressed these issues quite well.

    I like to put it this way:

    We’re all in favor of profits, but…

    Democrats favor healthy profits,

    and Republicans favor obscene profits.

    There’s evidence that some large businesses have relocated their headquarters to states where their top execs can enjoy lower personal taxes. Hey, if they prefer San Antonio to Santa Barbara, that’s fine with me.

    But these corporations still pay California taxes on profits earned in-state. The same evidence indicates that out-state corporations have been expanding operations in California in recent years.

    Many of the anecdotal stories of small businesses being “driven out” of the state are referring to situations where owner decides to retire and move to Montana. Others involve operations that are succumbing to foreign competition.  Blame Federal trade policy, not California’s tax policy for that.

    The real burden on small business in California is the high fees they must pay for zoning changes, water district fees, etc. when they want to expand. Why are these fees so high? Because property taxes are so low!

    The deck is stacked in favor older, larger, established businesses protected by Prop-13 tax rates.

    This is the Republican’s “level playing field”.

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