OUR ECONOMY NEEDS A SHOT IN THE ARM, NOT TO BE SHOT IN THE FOOT — By Assemblyman Houston — In recent weeks both AAA and Toyota have announced they are closing or relocating because of the high cost of doing business in California—a loss of more than 3,000 jobs. Why? Because it is simply cheaper to do business in other states.
AAA has decided to close its three call centers in California and move them out of state—a loss of over 900 jobs. The Livermore AAA call office will be closing by September 1st meaning more than 300 people will lose their jobs. The Elk Grove office will also be closing, leaving 500 more Californians unemployed. Arizona has already opened a new call center and Oklahoma will be opening the second call center to make up for California’s closing centers.
Earlier this summer, Toyota was considering expanding their Bay Area plant in Fremont to increase their ability to manufacture their Prius hybrid cars, but coincidentally, or maybe not, not long after California Democrats proposed to raise billions of dollars in new taxes, Toyota has announced they are moving over 2,000 jobs to a more pro-business state. They will not be expanding their facilities in the Bay Area, but instead they will be building a brand new facility in Blue Springs, Mississippi.
What Mississippi gains and California loses: Toyota’s $1.3 Billion investment in the facility; 2,000 direct jobs once the plant is in operation; another 4,900 jobs within five years of the plants’ opening; an annual payroll of $328 million; and loss of revenue to the state of $693 million.
Large companies are not the only ones hit hard by new taxes—small businesses are having trouble keeping their doors open in California too. There are over 3.2 million small businesses in California and they operate on very narrow profit margins, sometimes as low as three percent. A majority of businesses in the state are small businesses. California can’t afford to have more of them leave the state or go out of businesses because they can’t cover their costs and turn a profit.
Our state’s high taxes and extensive government regulations have led to an over 40% increase in spending over the past ten years. If this number isn’t troubling enough, California home prices have fallen 28% from last year. The cost of gas per gallon has skyrocketed over the last year. Now the Democrats in the Legislature have proposed to raise your taxes billions more.
California has one of the highest tax rates in the nation, second to only New York City. The Democrat budget proposal includes $9.7 Billion in new tax hikes—which would give California the prestige of levying the highest taxes in the nation. The proposal includes $5.6 Billion in new income tax revenue, $1.1 Billion will come from eliminating deductions for research conducted by businesses, $215 Million by reducing the dependent-care credit for families with income of $150,000 or more, and $815 Million from not adjusting current tax brackets for inflation—hitting hardest middle income taxpayers with joint incomes of $97,000 or more.
Enough is enough, now is not the time to increase taxes on hardworking families or businesses. Now is the time for the state to reign in and cut wasteful spending so more California businesses and jobs are not lost to other states.