California drives young entrepreneur to flee to Texas

I'll tell you the story of Erica Douglass in a minute. But first, as an appetizer to cleanse your palate, a little macro news from the California State Controller. California Bleeding:
SACRAMENTO – State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in July, showing revenues were down $538.8 million (-10.3 percent) below projections from the recently passed state budget.

"While July's revenues performed remarkably similar to last year's, they still did not meet the budget's projections," said Chiang. "While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year."

Income taxes were above projections by $89 million (2.9 percent) in July. But sales taxes were down $139.4 million (-12.5 percent), and corporate taxes were down $69.5 million (-19.3 percent) in the same month.

The State faced an $11.1 billion cash deficit on July 31. That deficit was covered by internal borrowing, or short-term loans from special funds, along with external borrowing.

For more details, read July 2011's financial statement and summary analysis.
In short, the Democrats' recent budget was complete hopium and relied on a miraculous economic rebound dropping magic revenues from the sky. Today's Dirty Fed announcement pours some cold water on that one.

And now that you understand California's fiscal situation, let me give you a micro view, the tale of one young entrepreneur who hoped to buy a house in a lovely beach town, run her business, employ a few people, and contribute to California's economy.

Meet Erica Douglass. I first met Erica a couple years ago in the comments at bubbleinfo.com, where she was waiting for home prices to drop to more reasonable levels in the beach areas of northern San Diego County. Today, it's a different story. Dear California, I'm leaving you. Here's why:
Examples of the Crap California’s Government has Put Me Through

Okay, you want examples. Here are a few things I’ve had to deal with:

1. The State of California arbitrarily decided that all businesses that gross over $100,000/year should have an account where you have to report quarterly on the sales tax your customers pay you for goods sold. The only problem? My company only sold services–not products–which aren’t taxed in California. When I closed the account (by going into a local office and spending nearly an hour explaining my situation), they forced it open again and sent me a nastygram explaining that I would owe fines for not filing the quarterly report. You have to file it 4 times a year, and it takes time to fill out, even if you haven’t sold any products and owe the state nothing.

2. The state charges an income tax of 10% on all income over $47,055. This is in addition to the Federal income tax of 25% on income over $34,001. This is also in addition to an 8.25-9.25% sales tax (depending on where you buy products.) I paid enough in income tax for 2010 to the state of California alone to hire another new worker for my business. I’d bet a lot of money that I’m far more efficient at creating jobs as a small business owner than the state is given the same amount of money. I’d rather have that money to hire someone.

3. And a really dumb law for small business owners, which Meg Whitman promised to repeal: An annual fee of $800 just to have a corporation in the state of California. (Most states don’t charge you, or only charge you a few dollars, as an annual fee to set up a business. California’s is exorbitant, and it applies as long as you, the primary officer of the corporation, live in California…no matter where you incorporate.)

The final straw, as I suspected, was the Amazon tax, which will raise precisely $0 in revenue while driving hundreds or thousands of businesses out of state. I also suspect that California's high cost of living and outrageous real estate prices have played a role. But this sharp young millionaire entrepreneur, like thousands before her, will be headed somewhere businesspeople are appreciated: Texas.


ubu roi said...

I left San Jose last January, took a 6 figure job in North Atlanta. Now I own a beautiful 3400 sq/ft house (168k on 1 acre) a walk from Lake Lanier with zero crime, excellent schools, and very low taxes (and a county government that intends to keep it that way).

Plenty to do here, great food, and friendly people. Spent 4th of July eating some of the best BBQ in the country and shooting assorted firearms in my buddy's 5 acre backyard. Rednecks do know how to have fun.

CA viewed me as a sucker, a cash cow, the man who was supposed to work 70 hours a week to pay for the illegals and the deadbeats and the government pensions. And don't even get me going on the pile of shit houses for 500k; I used to laugh myself right back out the front door.

Goodbye beautiful Golden State, I loved you but you just wanted me around to pay your debt and your teacher's unions. I can buy your wine at stores here when miss you.

W.C. Varones said...

Good to hear from you, ubu!

Glad to hear you've escaped to the land of the free!

Independent Accountant said...

Tell Douglas welcome to Texas!


Jr Deputy Accountant said...

Sounds a lot like what drove me out. The 10% sales tax, the San Francisco Parking Gestapo treating my beat up Mazda like a piggy bank, knowing I was being bankrupted by the state to pay food stamps and health care bills for illegals while I had to skip such luxuries as health care for myself.

Is DC any better? Not really. But at least they are open and upfront about the robbery. And hey, we have free museums.

Anonymous said...

The fact that Casey Serin, Sacramento Crime Family Consigliere, remains a free man is reason enough to leave the state.

At least CitiMortgage foreclosed on his parents' asses earlier this year. They're now either perma-renters for life, or mooching off extended family, depending on whom you believe.

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