California Coughs Up Millions in Incentives, Competes with Texas to Attract Businesses

California lawmakers try to compete with Texas and exhaust millions of dollars in incentives to draw in and maintain businesses.

Everything, including business, is bigger in Texas, and the state has become a safe haven for businesses seeking relief from regulation and over taxation. Toyota announced in April that it was relocating its North American headquarters from Torrance, California, to Plano, Texas – along with 4,000 jobs.

A $40-million incentive closed the deal for Toyota executives, who have been located in Torrance since the early 1980s. The company broke ground on a brand new facility in Plano this year, which is expected to open in early 2017, and also plans to consolidate its operations in Michigan and Kentucky.

Toyota's withdrawal from California turned several heads this year and now has lawmakers scrambling to stop the ever-growing trend as businesses flee the state, resulting in the loss of more jobs.

California is showcasing a $750-milion plan to stay in the game, as many struggling companies seek relief in a downed economy that can no longer be ignored by the state's officials.

Amazon, Petco, and Samsung were the first companies to receive tax credits in June, just a few of the California-based companies who have been offered huge incentives and tax breaks by Texas and its limited-government approach to business. The plan hopes to curb the trend of citizens and corporations who view Texas as the superstar of enterprise. 

Texas has earned a reputation for being "hands-off" when it comes to business regulation and strategy for reeling in struggling businesses from across the country, whereas California has more recently become known for its tendency to pounce on burdened companies with increased fines and more regulation.

The two states are clearly polar opposites when it comes to job growth and creation, and many company executives have had to decide whether or not doing business in California is worth the trouble.

The state income tax for California can fall anywhere between 1 and 12.3 percent, where a flat "0" looks more attractive to those considering Texas as a place to do business.

California has seen more than 50 companies leave the state in the last year alone to avoid high income and property taxes, as well as an environment that seems hostile to big business. This forces companies, both large and small, to reevaluate their options.

At one point, California Governor Jerry Brown was blasted for not being aware of Toyota's plans for relocation, drawing criticism from political opponents and many in Texas for being out of touch – this as Governor Rick Perry continues to take credit for the jump many companies are taking to his state for its low tax rates and regulations.

Many still view the Golden State as a place of opportunity, but lawmakers must make a convincing push to keep these big businesses that anchor their communities afloat, although most are likely to never relocate. 

California voters have a huge leg up in formulating California's business model, but until they do their job at the ballot box, many of their jobs are prone to termination as they saddle up for greener pastures.


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