News, New Jersey, New York and California Have Worst Tax Climates for Business, Tax Foundation Says. (sales, profit)

[user_id]

Originally Posted by f_m

And how many jobs in the country are actually tech related with high pay?

A lot, not counting management/executives around 3.5 million.

Originally Posted by f_m

I've been to various factories in the area, but the reality is people who work in manufacturing can't afford nearly the same kind of living they could get in the midwest and south, and many of the workers are immigrants taking low pay (some places only have immigrants).

This is only partially true, the workers get paid a bit more in California than they would in the Midwest, etc. The only major cost differences is housing. And sure, uneducated immigrants play a big role in low skill manufacturing and Los Angeles has many of them which makes it a great place to do this sort of work.

Originally Posted by f_m

Another reason it's not suitable for manufacturing, the employees will always want more money to be able to afford the cost of living.

Its sort of hard to claim that Los Angeles is not suitable for manufacturing when it has a huge manufacturing sector. Manufacturing both low and high skilled is almost everywhere in Los Angeles!

Originally Posted by f_m

If you have to refer to people as "backwater" I guess you don't have much respect for people looking to make a living.

I'm referring to the areas as backwater, not necessarily the people. But its not like the Southerners are known for their sophistication.....

Originally Posted by f_m

The truth is cost of living is a major issue if you have a large number of employees.

And why is that? Why would the cost of living matter to you as a business owner? That is your employees issue. What you are going to care about as a business is what wages you have to pay to get good workers and there is an ample supply of workers in the Los Angeles area that are willing to work hard for low wages. Seriously, put up a job listing for low skill manufacturing work paying $8~9 bucks and see how many applicants you get.

Los Angeles is a good area to do manufacturing especially for already established manufactures due to Prop 13. If I was going to open up a large factory I'd probably locate it in the Mid-west or the Pittsburgh area though. But that choice would have nothing to do with taxes or wages, rather the cost of a factory in the Los Angeles area. I could purchase a factory in Ohio or Pennsylvania for pennies and still have a pretty decent supply of low cost labor.

[AlfredB1979]

Originally Posted by user_id

Isn't it funny that New York and California also have some of the largest economies in the union? I guess its not driving away too much business.

These sorts of things are always short sighted. I've done business in PA and CA and I much prefer CA. Not only does the state supply much superior information, but I pay less taxes in CA. CA can be a rather nice place for a start-up taxed as a partnership as their tax system is highly progressive. On the other hand California is not so nice for a large established business. That is different states offer different advantages depending on the size and stage of your business.

I don't believe ANYONE considers two states with about $200 billion in unpaid liabilities to be large economies. I know folks get shifty with what they define as GDP, but come on. Last I had checked, Cali has $55 billion in immediate debt and NY state was tacking on $18 bil of its own.

I would invite you to visit either the LA or Long Island forums and ask them how many jobs are coming into either area. Its not that many.

In that sense, Zimbabwe is also large.

While being a start-up is great, grow to the size where Cali requires a business to either have worker's comp insurance or default to the state's plan and things go haywire. There is a reason the state of Cali is its own largest worker's comp insurer and it's not because it is cheap to do biz there on the grand scale. Just one of those things I found while researching that subject in Cali last summer.

[user_id]

Originally Posted by AlfredB1979

I don't believe ANYONE considers two states with about $200 billion in unpaid liabilities to be large economies.

Huh? The amount of debt the state government has and the size of the California (or NY) economy is are totally different issues.

Originally Posted by AlfredB1979

I would invite you to visit either the LA or Long Island forums and ask them how many jobs are coming into either area. Its not that many.

Well duh, the country is in a recession. California has been hit hard by this recession because it was in some sense ground zero for the housing bubble.

Originally Posted by AlfredB1979

While being a start-up is great, grow to the size where Cali requires a business to either have worker's comp insurance or default to the state's plan and things go haywire.

Dude, you have to have workman's comp insurance even if you just have a single part-time employee.

Large companies do not have to pay workman's comp,they can self insure.

[GraniteStater]

I am glad to see New Hampshire rank high on the list. We can steal new potential businesses that might not consider the other New England states. NH is ranked as having one of the lowest tax burdens of any state with property taxes being the one detractor.

[f_m]

Originally Posted by user_id

A lot, not counting management/executives around 3.5 million.

As a percentage of the population, that's not a lot of jobs.

Originally Posted by user_id

This is only partially true, the workers get paid a bit more in California than they would in the Midwest, etc. The only major cost differences is housing. And sure, uneducated immigrants play a big role in low skill manufacturing and Los Angeles has many of them which makes it a great place to do this sort of work.

I found a report by the state which shows the manufacturing jobs have gone down (not even taking into account population growth). It also shows that retail and manufacturing jobs make up a large portion of the jobs, which is why I said high tech jobs are not accounting for as large a portion of jobs.
http://www.library.ca.gov/CRB/04/05/04-005.pdf
Although their data is only for 1980 to 2000, they point out in their conclusion that even though pay to assembly workers has not changed much in that 20 years, there must be other reasons for the reduction in these types of jobs.

"This report has shown that the manufacturing wages and salaries of assembly workers have not had a significant increase in the past 20 years. If the manufacturing costs of doing business are increasing in California, then it does not seem to be because of the wages and salaries of assembly workers. Future research needs to look at other labor related costs (workers compensation, unemployment tax, health insurance cost), environmental compliance, litigation costs (liability insurance), and tax related costs (sales tax, corporate income tax, and property tax)."

I work with different people who own their own businesses in CA and they tell me it's expensive to deal with manufacturing workers because of the costs outside of their wages. Which is exactly what the above quote is pointing out. All these other associated costs are more than most other places, which is why the article is talking about the situation not being tax friendly. One example I was given by one of the business owners was it was cheaper to pay a desk job $10 (example) compared to an assembly job $10 because after all the other costs, the assembly job has more additional costs.

Originally Posted by user_id

Its sort of hard to claim that Los Angeles is not suitable for manufacturing when it has a huge manufacturing sector. Manufacturing both low and high skilled is almost everywhere in Los Angeles!

They look to get the immigrants who will accept the low pay, as indicated in the report, the pay for these jobs has risen very slowly (conditions are somewhat sweatshop like in some places). CA offered Toyota lots of benefits to keep NUMMI, but they didn't want to do it, it's just cheaper elsewhere. You can pay an autoworker $20-25/hr in the midwest and they could buy a middle class house, but no chance of that in CA urban areas. I know Sony closed their CA TV factory recently, despite it being over 30 years old.
State offers incentives to save Nummi plant

Originally Posted by user_id

I'm referring to the areas as backwater, not necessarily the people. But its not like the Southerners are known for their sophistication.....

Why are the areas backwater, if you are looking at hiring immigrants in CA versus Southerners in other areas of the US? At least the Southerners speak English as their first language. It's not like you are trying to recruit people that go to the Symphony.

Originally Posted by user_id

And why is that? Why would the cost of living matter to you as a business owner? That is your employees issue. What you are going to care about as a business is what wages you have to pay to get good workers and there is an ample supply of workers in the Los Angeles area that are willing to work hard for low wages. Seriously, put up a job listing for low skill manufacturing work paying $8~9 bucks and see how many applicants you get.

Of course you will get many applicants, but these days you will get many applicants everywhere for $8-9.

It's an issue because the employees will eventually want more money or not be happy with the employment. This causes more turnover and lower quality. Again, one of the business owners I worked with always had people leaving, even though they were good employees, because they wanted more money. In lower cost of living areas, what they were getting paid would be able to buy a much better lifestyle than in CA. I did the exact same thing, but if I lived where it was less expensive it wouldn't have been as much of an issue.

Originally Posted by user_id

Los Angeles is a good area to do manufacturing especially for already established manufactures due to Prop 13. If I was going to open up a large factory I'd probably locate it in the Mid-west or the Pittsburgh area though. But that choice would have nothing to do with taxes or wages, rather the cost of a factory in the Los Angeles area. I could purchase a factory in Ohio or Pennsylvania for pennies and still have a pretty decent supply of low cost labor.

So you're saying LA is a good place for having a manufacturing business, but you wouldn't open such a business there. Well, what is that saying? Sounds like it says it really isn't such a good place to set up such a business. Cost of the factory is still tied to taxes. For someone who owns the building a long time ago it's not a bad deal, but that doesn't have to do with what the article said.

[user_id]

Originally Posted by f_m

As a percentage of the population, that's not a lot of jobs.

No single industry makes up a significant percentage of total jobs and the Bay area has a high concentration of technology related jobs.

Originally Posted by f_m

Although their data is only for 1980 to 2000, they point out in their conclusion that even though pay to assembly workers has not changed much in that 20 years, there must be other reasons for the reduction in these types of jobs.

This is silly, manufacturing jobs have declined throughout the nation. The fact that manufacturing job growth in California has declined since the 1980 is completely unsurprising. The question is whether California has lost more manufacturing jobs than other areas? And I think with the exception of perhaps Texas the answer is "no". California still has a large manufacturing sector.

And the article you posted does not even categorize technology jobs!

Originally Posted by f_m

I work with different people who own their own businesses in CA and they tell me it's expensive to deal with manufacturing workers because of the costs outside of their wages. Which is exactly what the above quote is pointing out.

No the above quote is saying wages are low in California (like I said in previous posts, you said the opposite) and they need to research other things. Its making no claim other than "its not wages".

Doing manufacturing in California is not dramatically different than doing it in other states. Workman's comp rates are based on the same mathematics as they are in other states, regulations are similar, etc.

But really, California still has a robust manufacturing sector (far more robust than most states) so talking about what its doing wrong makes little sens!!

Originally Posted by f_m

it was cheaper to pay a desk job $10 (example) compared to an assembly job $10 because after all the other costs, the assembly job has more additional costs.

Well duh, this is true in ALL states! Manufacturing is far more dangerous than a desk job and the related insurances are higher as a result. This is in no sense unique to California.

Originally Posted by f_m

Why are the areas backwater, if you are looking at hiring immigrants in CA versus Southerners in other areas of the US? At least the Southerners speak English as their first language.

The areas are backwater because because they are filled rather uneducated people. Sure there are some nicer areas in the South, but these are generally not where they are building factories. The worker's first language is irrelevant.

Originally Posted by f_m

So you're saying LA is a good place for having a manufacturing business, but you wouldn't open such a business there. Well, what is that saying? Sounds like it says it really isn't such a good place to set up such a business. Cost of the factory is still tied to taxes.

Its saying exactly what I said, the cost of property in California is too high. It has nothing to do with taxes or regulations as you are suggesting, its the cost of property. Something that is largely out of the state government's control!

The cost of the factory is not tied to taxes, property tax in California is lower than other states even if you factor in the higher property prices.

But really, I'm talking about coastal California. You can purchase/build a factory very cheaply in inland California. But personally, I'd rather live in the mid-west than inland California.

[f_m]

Originally Posted by user_id

No single industry makes up a significant percentage of total jobs and the Bay area has a high concentration of technology related jobs.

Of course, but if you look at figures, technologies jobs are still not among the highest in number, and of course they are generally not manufacturing jobs. As you can see from the tables below, most employment is government, military, education, healthcare, retail/entertainment/sales. There are some private sector aerospace with manufacturing, but it's largely tied to military/government. There are high tech companies, but the number of jobs is lower than the main employers in the areas.

Largest Employers
Largest Employers
City of San Jose Planning: Fact Sheet

I also mentioned that the reduction in manufacturing jobs figure was not even tied to the change in population. CA population increased over 40% from 1980 to 2000, so the manufacturing jobs did not keep up with that. Therefore, a reduction is significant, because if the jobs increased somewhat proportionally with population, even the reduction they noted would have still been a net increase in jobs over the 20 year period.

As far as taxes, if the property is more expensive then the taxes would be higher than places with much lower property values (and reasonable taxes).

I already named many large companies that moved out to other places, so if it was so good to be in CA why didn't they stay, they already were here before the property value went up in the last decade, so they shouldn't be as affected by higher property costs. Intel closed various offices to move to AZ, etc... (I worked with someone who's job was moved there), Toyota just left, Sony closed their TV plants for Mexico, Nissan moved their office jobs to TN, etc...

Another person I worked with, his company moved out in the 90's to OKC, another guy I talked to in the 90's, his company moved from the LA area to Arkansas, he mentioned being able to register a new Corvette he got for around $60.

If it was such a great place for business, then I don't see why all these companies would want to move when they have been in the area for a long time. If it's a money issue, then clearly staying in CA is not financially a good idea. As you mentioned, it is cheaper to move inland CA, but it's not much better than other parts of the country in some respects. International Rectifier is moving from prime El Segundo real estate to Temecula, probably because it's cheaper to do so, although at the same time, they are eliminating hundreds of their manufacturing jobs.

You seem to be focusing on high tech startups (without specifics), but they don't employ large numbers of people and don't add significant manufacturing jobs to the area.

In regards to workers comp. insurance. Even if the percent rates are the same (although there was a report suggesting that CA raise their rates even more), it depends on what you pay people. Since in CA people will likely be paid more than someone in a lower cost of living area, the actual amount paid will be more.

[user_id]

Originally Posted by f_m

Of course, but if you look at figures, technologies jobs are still not among the highest in number

What in the world is your point? I never suggest technology jobs are "among the highest" rather I stated it is a decent sized industry and that the bay area has a high concentration of technology jobs.

Originally Posted by f_m

I also mentioned that the reduction in manufacturing jobs figure was not even tied to the change in population. CA population increased over 40% from 1980 to 2000, so the manufacturing jobs did not keep up with that....

What don't you get about the fact that manufacturing jobs have contracted throughout the nation? This is not unique to California, citing numbers about California tells you nothing about how California compares to other states which is the issue!

Originally Posted by f_m

As far as taxes, if the property is more expensive then the taxes would be higher than places with much lower property values (and reasonable taxes).

Yes, as I said in my previous post "he cost of the factory is not tied to taxes, property tax in California is lower than other states even if you factor in the higher property prices". Property taxes in the mid-west are around 2~3 times higher than in California, so even if the property is half the cost the taxes are still usually less in California.

Originally Posted by f_m

I already named many large companies that moved out to other places, so if it was so good to be in CA why didn't they stay...

Companies move for all sorts of reasons. You merely assume that because a company left its because the taxes/regulations.

Originally Posted by f_m

You seem to be focusing on high tech startups (without specifics), but they don't employ large numbers of people and don't add significant manufacturing jobs to the area.

Again what is your point? I never claimed that tech startups add significant manufacturing jobs. Why would that even be important?! I stated that despite all the talk about California being bad for business, Silicon Valley is still attracts the largest amount of venture capital and still produces a large number of start-ups.

[f_m]

Originally Posted by user_id

Again what is your point? I never claimed that tech startups add significant manufacturing jobs. Why would that even be important?! I stated that despite all the talk about California being bad for business, Silicon Valley is still attracts the largest amount of venture capital and still produces a large number of start-ups.

That's why they listed CA in the bottom of the list of states for business tax climate. Start ups generally don't make money until a number of years (and generally don't have much manufacturing or large number of job positions), but most of them are out of business or bought out before then, so tax on any profits are not an issue. That's a reason why those kinds of businesses are not heavily affected by tax issues.

[user_id]

Originally Posted by f_m

That's why they listed CA in the bottom of the list of states for business tax climate. Start ups generally don't make money until a number of years (and generally don't have much manufacturing or large number of job positions), but most of them are out of business or bought out before then, so tax on any profits are not an issue. That's a reason why those kinds of businesses are not heavily affected by tax issues.

Sorry, but this is just wrong. Tax issues are most certainly important for start-ups, in some states you'll pay tax even if you made no profit.

The issue here is that there is no "one size fits all" tax system, different tax systems are better for different sorts of businesses and different sorts of stages. These rankings are always ideological, they start with an assumption about what is the best tax climate.