Washington View: High taxes, red tape remove shine from Golden State - Columbian.com

California was once the land of opportunity. Since 1848, when John Marshall discovered gold in the Sierra Nevada foothills, people have flocked to "The Golden State" for jobs, sunshine and opportunity.Now our nation's most populous state with 37 million people, California has earned a tarnished image for high taxes, onerous regulations, government gridlock and unfriendliness toward business. That's disastrous news for a state with the world's 10th-largest economy at $1.813 trillion (gross state product).The unsavory reputation is having its impact on the state's beleaguered budget. These days, California's unemployment rate is two points over the national average at 11.5 percent, and its unemployment insurance fund is broke. Republican Gov. Arnold Schwarzenegger is feverishly working to plug a gaping $15 billion hole in the state's budget and has resorted to issuing IOUs.Neither Schwarzenegger nor the California legislature has much sympathy. In fact, voters showed their anger earlier this summer by handily rejecting tax increases to balance the budget.So what's wrong with California?As The Economist magazine recently reported, "Back in its golden age in the 1950s and 1960s, it (California) offered middle-class people, not just techy high-fliers, a shot at the American dream — complete with superb schools and universities, and an enviable physical infrastructure." Indeed, high taxes, coupled with intrusive regulations on business and greenery taken to silly extremes, have gradually strangled what was once America's most dynamic state economy," the well-read British magazine added.The Economist compared California to Texas, where unemployment is 2 percent below the national average, taxes are low and government regulations are more reasonable. California's core problem starts with a hobbled manufacturing sector. Manufacturing was the staple of California's economy, but a recent Milken study comparing California with Arizona, Indiana, Kansas, Oregon, Texas, Minnesota and Washington quantifies the decline. Milken's findings confirm that California has developed a reputation for not being friendly to business, as exemplified by the state's onerous regulatory climate and high taxes. According to its study, California lost 79,000 manufacturing jobs between 2000 and 2007, while its seven peer states added 62,000 manufacturing jobs.

via www.columbian.com

Good column by Don Brunell, AWB president, on California's self-inflicted wounds.