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CALIFORNIA RAISED TAXES AND GREW MORE JOBS

Last fall Californians voted to increase the state sales tax as well as income taxes for the wealthiest Californians. One executive in California predicted that this temporary rate increase would cause his state’s economy to self-destruct and that more companies “would be motivated to find greener pastures.” The Greater Phoenix Economic Council announced it would offer free airfare and hotel rooms to the first 50 California CEOs and high-tech, high-wage business owners who wanted to look at moving to Arizona. The assumption was that many of the California businesses fleeing east would relocate in Arizona, adding new jobs to our economy.

It’s almost been a year since the rate increase was voted through in California. So, did their economy self destruct?

Arizona_Locator_Map 100pxCalifornia_Locator_Map 100pxFar from it. According to the latest information from the US Bureau of Labor Statistics, Arizona has added 20,100 new jobs since December 2012 – a 0.8% increase. And California? That state added six times as many new jobs — 123,700 jobs over the same period, for an even larger increase — 0.9%.

The fact is that, whether it’s a business or an individual, deciding to leave one state to move to another depends on a lot of factors – and tax rates are far from the top of the list.

Arizona policymakers are beginning a public discussion about our state individual income tax. he new Joint Task Force on Income Task Reform had their first meeting yesterday and will meet for several more months to discuss tax simplification and fairness. Presentations in the first meeting highlighted how simple and low Arizona’s income taxes are already. See the bottom line about state taxes in CAA’s new fact sheet. We’ll keep you up to date as the discussion unfolds.

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