Heres a story that has the California press agog (certainly the San Diego press). Its a Forbes article describing a survey that ranks the best cities in America for starting a small business. San Diego is ranked #1, with San Francisco and San Jose in the top 12. But its the most absurd survey/study you can imagine -- beyond laughable. Read my extensive comment here: It’s great that 3 of the top 12 startup-friendly cities are (supposedly) based in California, with San Diego #1. But gee, that must mean the REST of California must be even worse than the (legitimate) studies indicate. The truth is, this survey is the most bogus nonsense Ive seen in a legitimate publication. But in fairness, its just the gonzo opinion of a columnist -- NOT the ranking by Forbes itself. --- 60% of the criteria for this startup business survey uses truly bizarre data: 1. Percentage of small businesses that accept credit cards. 2. Percentage of small businesses with Facebook pages and websites. 3. Percentage of businesses with online reviews. forbes/sites/tompost/2014/03/13/the-best-places-to-launch-a-startup-in-2014/ Gosh, perhaps a more important factor to consider is the chances that a new startup will SURVIVE! Consider: California small businesses failed in 2011 at a rate 69% higher than the national average — the worst state in the nation. money.cnn/2011/05/19/smallbusiness/small_business_state_failure_rates/index.htm (based on Dunn & Bradstreet study) In 2012, our supply of California businesses shrunk 5.2%. In ONE year. NOTE: That’s a NET figure – 5.2% fewer businesses in CA in 2012 than were here in 2011. Indeed, in 2012, CA lost businesses at a 67.7% higher rate than the 2nd worst state! riderrants.blogspot/2013/07/in-2012-ca-lost-businesses-at-677.html --- CA is NOT a very business friendly state: CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average state is 92. cssrc.us/publications.aspx?id=7707 Starting a business that hires employees? Check out the worker compensation rates: CA has the 3rd highest state workers compensation rates, up from 5th in 2010. CA had a 3.4% rate increase in 2013. cbs.state.or.us/external/dir/wc_cost/files/report_summary.pdf and tinyurl/2013-CA-rate-increase San Diego/California has high taxes. But the FEES are far worse — especially for a startup. Plus overlapping and sometimes contradicting agencies from which approval is needed all too often (with fees levied for getting the approval, of course). Perhaps the Golden State sets the example with it’s onerous corporate franchise tax “fee.” California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Oregon at $150. A few others under $100, with most at zero. tinyurl/CA-800-tax --- On the off-chance that your California startup survives and start making good profits, remember this: CA corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska. taxfoundation.org/article/2013-state-business-tax-climate-index Table #1 – we are 5th highest in nation in per capita corporate tax collections. --- While a small startup is QUITE different from a major corporation, its instructive to see what the big boys (with all their lobbying power) think of the California: 736 top U.S. CEO’s surveyed rank California “the worst state in which to do business” for the 9th straight year (May, 2013). 24/7 Wall St. ranks CA the “worst run state” for 3rd yr. chiefexecutive.net/best-worst-states-for-business-2013 and TinyURL/WorstRunState --- If you move to SF, San Jose, or San Diego to start a business, bring a bundle of cash for housing. SF has the nation’s MOST EXPENSIVE housing market. San Diego is 5th. San Jose’ is 6th. The size of a median affordable middle class home in San Diego? — 1,056 sq. ft. riderrants.blogspot/2013/10/the-us-least-affordable-housing-market --- There are many other reasons why a (sane) entrepreneur might want to think twice about picking San Diego (or any California city) for their startup. Income tax, for instance (assuming you are in business to make a pile of money). Consider: Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at $48,942 for people filing as individuals. 10.3% started at $1 million. Now our retroactive (to 1/1/2012) “millionaires’ tax” rate is 13.3% – including capital gains (California’s total CG rate now the 2nd highest in the civilized world! Denmark is #1.). 10+% taxes now start at $250K. CA now has by far the nation’s highest state income tax rate. We are 21% higher than 2nd place Hawaii, 34% higher than Oregon, 47.8% higher than the next 2 states, and a heck of a lot higher than all the rest – including 7 states with zero state income tax. CA is so bad, we also have the 2nd highest state income tax bracket. AND the 3rd. Plus the 5th and 7th. taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf Table #12 and twitpic/9g2pka/full and tinyurl/CA-2nd-CG --- One “rule” to remember if you want to start a business in California. Never, EVER think of making something tangible. This state is EXTREMELY anti-manufacturing. Manufacturing = byproducts = dirty business = drive ‘em out of the state. Consider: From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation’s population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California. cmta.net/20110303mfgFacilities07to10.pdf — prepared by California Manufacturers and Technology Association
Posted on: Sat, 15 Mar 2014 17:41:15 +0000
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