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Summary:

All you startup founders down in Austin for spring break SXSW, you should stay there. Texas, according to CEOs surveyed by Chief Executive magazine, is the most business-friendly state in the nation. In comparison, California is the worst. Unless of course, you’re in technology and/or looking […]

All you startup founders down in Austin for spring break SXSW, you should stay there. Texas, according to CEOs surveyed by Chief Executive magazine, is the most business-friendly state in the nation. In comparison, California is the worst. Unless of course, you’re in technology and/or looking to raise venture capital — when it comes to those two categories, the Golden State tops the charts. But in terms of “cost of business” and “business friendliness,” the magazine ranks it No. 48.

Granted, you might not want to take the magazine’s findings too seriously; there’s no information about what, exactly “business friendliness” or any other non-quantitative ranking criteria means. They’ve also left Washington, D.C., off their list this year (unlike previous years) — but still left a nice little hole for it at No. 42.

Still, startup founders, stay in Texas. We like that there’s no traffic on the 101 and you can actually sit in the coffee shop to enjoy your coffee this week!

  1. And that’s before Arnold’s big tax attack of this year’s budget starts to bite. Just wait until the huge state and local increases mount starting this coming year mass exodus, eh? Then you have to add in the issues of Lake Mead (water disappearing, chance of Hoover Dam not having enough to power SoCal) and So Cal will revert back to a desert.

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    1. Amen to that Dee. It is one bad socialist state that just is lucky to have good weather. I am pretty sure if it wasn’t the case many would move elsewhere

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  2. As far as “Friendliness” goes, California simply charges among the high taxes, regulations, permits, insurance, etc. as compared to other states. For example, when running a Corporation, even a one person show, CA will assess an $800 minimum income tax even if no profit is realized, or if the company is dormant. Add to that the contribution employers must fork over for unemployment insurance, state disability insurance (payroll taxes), high business license fees, increasingly mandatory health insurance costs. Every victory for the residents/workers of California, for them to be given more benefits by their employer then in fact hurts the employer financially.

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    1. Mr. Greenberg,

      I could not agree with you more. I think the taxes and all the related stuff are a joke. As a start-up founder I only know this all to well. I think it is an insane state which is basically run by idiots who blow through tax collections by being dumb, stupid and inefficient. okay, now i am less angry. :-)

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    2. I know! Really — how do people get off wanting to visit doctors when they get sick, or when they get injured on the job? That’s some serious socialist sh** right there.

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      1. What’s sick time (to see a doctor) have to do with state disability insurance?

        And what’s wrong with trying to make CA a better place to live? Are you saying that the state government spends its money wisely?

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  3. What this doesn’t take into account is the sheer joy of living here. In the bay area, we’re happier. We’re surrounded by success and that in itself is a driving factor. At the right SF coffee shop you’ll run into founders of a dozen startups that have had successful exits on any given day. Combine that with the number of world-class universities we have, the decent schools, and the large number of tech jobs, then you start to wonder, why would an entrepreneur want to go anywhere else?

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  4. Leave. Please. Stop complaining. Yeah, there are some taxes in this state but it’s the price you pay to live here. If the argument is that those taxes should be funneled to better places, I’d agree. But there is a price to pay for living in a civilized society – hell, there aren’t many taxes, or child-labor laws abroad, go start your business there.

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    1. The price you pay? Who decided on this “CA price premium”? This is a reflection on the (in)effectiveness of the CA state government to extract value from tax dollars. Complaining about the critics is ridiculous.

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      1. Right on ryan.

        John

        We pay the price in terms of taxes and yet the state has more homeless people and has a bigger deficit. what i don’t pay taxes for is supporting incompetent politicians

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      2. To be fair, California inherits a lot of homeless because the climate is better than most states.

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    2. Don’t worry — many people are taking your advice. As California’s economy and population shrinks, it will be fascinating to see how long the remaining population puts up with the increasingly large overhead.

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      1. Christopher

        I am just looking for more clearer and cleaner government and making them more accountable. seriously, more than the taxes it is the waste and deficits which annoy me most as a resident.

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    3. Just leave?

      Fixing it would be much more fun than leaving. Then we’d get the weather and the talent AND good government.

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  5. In the big list of things that startup CEOs have to worry about, the California state tax rate is pretty far down the list.

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  6. Simply put, CA is expensive in general, not just with businesses or starting them. I don’t know…after living in CA, I could never live in ND or some other out of the way middle of nowhere place. Too many conveniences you get used to. Trading some bad for lots of good (pointed out by Michael T. above) is the watchword for living in CA.

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  7. Is expensive as California is, Hawaii might be worse. Ask the Hawaii Superferry, which is shutting down its operations after losing a Sierra Club lawsuit.

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  8. Jesse Kopelman Wednesday, March 18, 2009

    Isn’t “business friendly” just code for State Government helps businesses bust and keep out labor unions?

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    1. Maybe but what good have labor unions done lately? I am all for the working man, but unions… don’t get me started. ;-)

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      1. Jesse Kopelman Thursday, March 19, 2009

        I agree that many existing unions are bloated messes that do more harm than good, but you can say the same about any group of large organizations (including corporations). Collective bargaining is a powerful tool to do good for both the worker and the corporation. Isn’t it better to have workers actually have a stake in the success of the company rather than being mercenary free-agents? A lot of people who have never belonged to a union miss the fact that they are still receiving the ancillary benefits of unionization within their industry — non-union companies have to at least stay within the ballpark of compensation at union companies if they want to attract skilled labor. This has certainly been the case in telecom. The idea that somehow unions are useless is just as misguided as thinking markets will regulate themselves.

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  9. San Francisco would certainly be the worst city of the worst state. Lots of talk from our mayor about how important smbs are to the economy. But the main bubble industry around here is are taxing and red tape. We are now figuring the cost of proving that we comply with all of the fine print of the new health care and commuter laws. These are benefits that we have been providing for years.

    Earlier this year, the city wanted us to detail every piece of business equipment we have (that we already paid the highest sales tax in the nation on), just so they could tax it.

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    1. “San Francisco would certainly be the worst city of the worst state.”

      Have you ever been to Stockton?

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