The Not-So-Golden State of California

http://blog.inc.com/nolan-bushnell/2009/06/the_notsogolden_state_of_calif.html

by weaksauce • 17 years ago

41 36 17 years ago

blog.inc.com

costan2• 17 years ago

Is there any good source of data about the best place to start a company?

anigbrowl5• 17 years ago

Surely what you want is the best data about good places to start a company.

The real answer: it depends on your criteria. Delaware is the cheapest place to incorporate, but nobody knows where it is. Nevada is the best place if your business involves lots of cash and/or hookers. Silicon valley may still be the best if you want to meet like-minded geeks. Hollywood stays in LA both for the infrastructure and the weather. Michigan has great incentives right now if you don't mind the cold winters...see the problem?

mahmud• 17 years ago

I think I like Nevada.

costan2• 17 years ago

I was looking for numbers, like the incorporation tax and state taxes for each type of company. If the data was neatly put together somewhere, we could all draw our own conclusions.

3pt14159• 17 years ago

If you are reliant on programmers/developers Canada is a great place to make a start up. Very tech-friendly and all those health care costs are offloaded to your workers' personal taxes. Toronto has high property tax, but very near by Mississauga and Thornhill have a ton of smart people and very low taxes, Waterloo is good too. Best of all these guys cost far less (in USD) than Seattle or Silicon Valley programmers.

Most of the governments in Canada (National, Provincial, and Municipal) are solvent, even in net-present-value terms, and crime and corruption is astoundingly low.

If you are hoping to sell off the company quickly, incorporate both in Delaware AND Canada and figure out how to sell the services through the Delaware office, so when it comes time for the acquisition you can easily be bought out by American interests.

anigbrowl5• 17 years ago

Although I'm a fan of Nolan Bushnell, this kind of blog posting is so lacking in content as to be useless. So regulation is onerous in California - fair enough. When did the burden of regulation reach a tipping point that made it too much of a handicap? how was it in the old days? What regulations, specifically, are the problem - taxation, employment law, consumer safety, or what?

California's government is the problem. The state is business-hostile. It is merit-hostile. It has the highest tax rates and returns less in services to its average citizens. Massive pension abuses are not dealt with.

One wonders if California's emphasis on citizen democracy is at the root of the problem. It's certainly left us with the best democracy that money can buy, which turns out to be a pretty bad one.

Andys• 17 years ago

I'm not sure about the 'citizen democracy' part... Did citizen democracy come up with the crazy electricity market system?

(I'm not familiar enough with California - But if it did, you got what you deserved :-))

anigbrowl5• 17 years ago

I was more thinking of the property tax caps (which may not have been such a good idea, but are hard to change) and the fact that you can get just about any old BS onto the ballot with 500,000 signatures, which you can collect for 1-2 million. Meantime, it takes 2/3 of the legislature to pass a budget and it's been late something like 17 out of the past 18 years. I do approve of the idea of ballot initiatives, but between one thing and another it's made our state terribly unwieldy to govern.

ckinnan• 17 years ago

California has some of the highest tax rates in the nation and is 48th in the nation in terms of business tax competitiveness.

http://www.taxfoundation.org/files/bp58.pdf

evgen• 17 years ago

So what? This is not a new condition, so one would have expected it to have some significant impact by now if this was really a factor to anyone outside of the "I got mine so screw you" set. Yet California's economy is still overwhelmingly larger than that of any other state in the nation. If the costs of operating in California were not outweighed by the benefits you would have expected businesses to flee the state and not be replaced; this hasn't happened yet and the odds favor California coming out of the recession at the same pace as the rest of the country.

Empact• 17 years ago

> California's emphasis on citizen democracy

Yeah, but there are much better ways to do it. I'd recommend a substantial decrease in the Citizen / Legislator ratio. That gives regular citizens greater access to their legislature, while giving its members the power and responsibility necessary for them to invest themselves in its decisions, and make a more direct case to the constituency for the more responsible policy decisions.

For example New Hampshire has

* 400 representatives for

* 1.3 million people, or roughly

* 3,000 constituents/legislator (illustrated: http://www.biblebaptistchurchmoldova.com/evangelism/images/m...)

Meanwhile, California has only

* 80 representatives for

* 38 million people, or roughly

* 475,000 constituents/legislator (illustrated: http://kashmirwatch.com/postnews/data/upimages/eidgah22aug2....)

New Hampshire citizens have over 150x the access to their state representatives, and those 400 legislators have 5 times the personal experience with laws and regulation to bring to the table.

Now you may say it's crazy to suggest that California should have 12,000 state legislators, but I disagree. The practicalities which have capped large-scale decision-making have largely been wiped away with the invention of modern electronic communication. And having those 12,000 means you could keep them in their home neighborhoods, rather than call them out to Albany. This way there's always someone within a reasonable distance that you can speak to directly.

Interestingly, with the position California is in, I'd think this idea (or a more moderate version of it, say 2,000 legislators) might have a chance at making it. That is, if people make a serious push for it in the new constitution.

anigbrowl5• 17 years ago

There are some interesting ideas there. I'm not in favor of the sometimes-suggested solution of splitting CA up into smaller states, but along these lines, I can't argue with the observation that our US senators 'represent' about 19 million people each, whereas a senator from Montana represents fewer than half a million.

rms• 17 years ago

This was probably the best article on the topic. http://www.economist.com/world/unitedstates/displayStory.cfm...

Posted here: http://news.ycombinator.com/item?id=645478

quisxt2• 17 years ago

Yeah, right.

California's problem is that we keep on spending money like it's flowing in like water, yet the flow was greatly reduced 30 years ago with the passage of proposition 13. Instead of trying to live within our means, we voted people into office who either wanted to spend more, xor reduce taxes and then we made the problem much worse by passing a slew of costly initiatives without being willing to raise the money to fund them fully. So here we are. The governor screwed us, the state senate and legislature screwed us, but ultimately, we screwed ourselves, and now we're going to have to pay for it.

As someone who lived most of my 38 years in this state, went to UC, and has the joy of living in one of the most beautiful places on earth, it makes me profoundly sad to see what we have done to ourselves.

gscott3• 17 years ago

The rich love to assail Proposition 13 but without it a normal person could not retire in Califronia after working a lifetime in California. The other problems are as you mentioned and are obvious to everyone not in Sacramento.

quisxt2• 17 years ago

Whether or not that is the case, the initiative immediately cut property tax income by 57(?)% and made it much more difficult for the state to raise money by increasing taxes. That's not necessarily a bad thing, but you can't lower taxes without also decreasing spending.

As far as the problem being obvious to "everyone not in Sacramento," clearly you are wrong because here we are, and the voters of California played an active role in bringing us here.

jacobolus• 17 years ago

Helping “normal people” retire was cited as the reason to pass Proposition 13, but the biggest beneficiaries (and the initiative was designed with this in mind, to be sure) were corporate property owners, who because they never get old and die, can never have their property taxes raised (well, it can increase 2% per year, generally less than inflation).

donaldc2• 17 years ago

Unfortunately, Proposition 13 is a lot broader than merely allowing retirees to stay in their homes. The tax breaks can be passed on to children if they take over the house, essentially creating a privileged and heritable class of homeowners. And it also applies to properties owned by companies, which has nothing to do with people being able to stay in their homes.

If property taxes on residences are too high, they should be lowered across the board. Of course, this means that either spending will need to be lowered, or the money will need to be gained through some other form of taxation.

eggnet2• 17 years ago

Do you have any references for your position?

Proposition 13 is not California's problem, read this if you are interested.

http://weblog.signonsandiego.com/weblogs/afb/archives/034048...

russell• 17 years ago

The guy doesn't know what he is talking about. One of the problems with Prop 13 is that property taxes are limited to 1% increase per year. It gets reset to 1% of the property value when the property is resold. Home taxes have been rising steadily because homes get resold on the average of every 5 years. Commercial property, like oil refineries and office buildings which are not often resold, are stuck at 1978 rates. If commercial properties were revalued every 5 years, local jurisdictions would be in a lot better shape.

The San Diego Union Tribune is a right wing knee jerk paper. Any commentary in it should be taken with a grain of salt.

anamax4• 17 years ago

> then we made the problem much worse by passing a slew of costly initiatives without being willing to raise the money to fund them fully.

That's simply not true.

CA's spending has increased 20+% more than population and inflation since 2005 or so. Initiatives are not responsible for a significant fraction of that increase (and most of them are self-funding).

Note that the amount of the increase since 2005 is roughly equal to the deficit, so cutting back to then would balance the budget.

I'd argue that none of the new programs and increases since 2005 have been a significant benefit. Those who do think that their new program is essential are invited to find some pre-2005 fat to pay for said program.

hyperbovine• 17 years ago

Paraphrasing something I heard on NPR...

California is the 8th largest economy in the world. We have the world's most productive agricultural region, two of the world's top universities, the largest port in the US, Hollywood, Silicon Valley, and tourism.

WHY THE HELL CAN'T WE MAKE IT WORK?

sarvesh• 17 years ago

Because we expect too much for what we pay in taxes, add to that we also elect some of the dumbest people into office.

TriinT• 17 years ago

"We have the world's most productive agricultural region"

I doubt that California can beat hi-tech farms in Brazil and South Africa. The climate is good, but not that good.

"two of the world's top universities"

It's more like three: Caltech, Stanford, Berkeley. The other UC schools are quite good too. For instance, UCLA is strong in math, while UCSB is strong in physics, etc.

The Not-So-Golden State of California

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