Texas Gov. Rick Perry is at it again. And this time he didn’t forget his lines.
“Building a business is tough, but I hear building a business in California is next to impossible,” was Perry’s opening salvo in a radio ad that recently premiered on airwaves across the state. Perry urged business owners in the Golden State to relocate to Texas for its “low taxes, sensible regulations and fair legal system.”
California Gov. Jerry Brown dismissed Perry’s allegations as “barely a fart,” but there’s more to Perry’s accusation than first meets the eye — or the nose.
Texas legislators have enthusiastically attempted to remake Texas’ image as the business Mecca of America. The state has no personal income tax, no corporate income tax (although the state does charge a low percentage of companies’ gross receipts) and a relatively low sales tax. With California leaders increasingly focused on simply staying afloat, the Lone Star State’s makeover may just be working.
While Texas dreams big, California appears mired in economic and political deadlock. After the passage of Brown’s pet project Proposition 30 in November, California boasts the nation’s highest sales and personal income tax rates, along with a corporate income tax rate that remains one of the steepest in the country. The Tax Foundation, a research and analysis group that issues annual reports on American states’ “business tax climate,” ranked California the 48th best state in the country to do business in the 2013 fiscal year — and that was before Prop. 30 passed.
Not exactly “Eureka.”
But like his failed presidential campaign last year, Perry remains hopelessly misguided. Low taxes and hands-off government aren’t the only factors that make a state pro-business. In fact, the three states that came out on top of the Tax Foundation’s 2013 “State Business Tax Climate Index” were Wyoming, South Dakota and Nevada — three states that, despite their light tax burden, usually attract more flies and cow pies than entrepreneurs.
Since 1849, Americans have flocked to California for its sun, seashore and abundant natural resources. While Texas may attempt to make up for its shortcomings in the area of livability with tax incentives and economic scheming, California’s long-term business plan is to stay California.
What Perry and his ilk don’t realize is that “pro-business” is more than just numbers on a spreadsheet. Entrepreneurship requires creativity, abundant local capital and a community that’s willing to embrace untested new products and experiences. Entrepreneurship demands the ability to temporarily ignore looming financial concerns while maintaining the determination to survive on the market. Entrepreneurship, by its very nature, transcends simple monetary calculation.
It’s the entrepreneurial spirit and drive that Texas lacks and California has in abundance — and the need to fill that innovative void is what prompted Perry to beg for business. That spirit is why Silicon Valley remains the nation’s premiere location for technology start-ups, the birthplace of such tech giants as Google, Apple, Intel and Hewlett-Packard. It’s why California’s 3.4 million small businesses dwarfed Texas’ 2.2 million as of 2009. It’s why California’s G.D.P. remains higher than that of entire countries like India, Australia and Russia.
The fundamental assumption of Perry’s entire anti-California campaign lies in his belief that American businesses — California businesses — pay no attention to anything outside their bottom line. Perry dismisses the idea that some corporations may be dedicated to creation and innovation above glamorously greedy profit margins.
But in California, we live that golden ideal. Businesses largely respect environmental regulations as essential to a healthy state, and they accept California’s high minimum wage and taxes in order to ensure that society profits in the long run, not just individuals. From recent increases in spending on California’s prestigious public university system to the planned construction of a state-long high-speed rail line, California is investing in its economic future unlike any other state — including Texas. Cutting taxes and lifting regulation will never be the economic boost that a culture of progress is in California.
So has Texas usurped California’s title as America’s commercial giant? In the eyes of Gov. Perry, Texas may be well on its way to bigger business, bigger profits and a bigger ego. In San Francisco on Monday, he boasted that “12 years ago, California wasn’t looking over its shoulder. They’re not looking over their shoulder now — they’re looking at our backside.”
But even despite the truth that all is not well in California’s economy and political climate, it doesn’t appear Texas will be making a move on the Golden State anytime soon. Because California has something Texas will never have — California.
Trust me, Texas: Don’t mess with California.
Contact Connor Grubaugh at [email protected] or follow him on Twitter: @ConnorGrubaugh.