[gamblor956]

Good bye!

Most businesses leaving California report growing losses after they leave. A lot of them fail.

As it turns out, the problem was never California. The problem was that they just couldn't cut it in a competitive environment that doesn't coddle business owners.

[robomartin]

> As it turns out, the problem was never California. The problem was that they just couldn't cut it in a competitive environment that doesn't coddle business owners.

These kinds of comments usually come from people who know nothing about running a non-trivial business.

Simple example: Only business owners/operators know about the city of Los Angeles Business Property tax.

What is it?

Most people would guess it's like the property taxes assessed on homes. Not so. Not even close.

This is a tax the city imposes on any business operating in or through the county. If you so much as drive through the county you have to pay it.

What do they tax?

Your desks, chairs, printers, computers, workbenches, tools, paper shredder, equipment (for example, all the machinery in a CNC shop). They even tax tenant improvements. If you lease a commercial space, paint the walls and perhaps build a few divider walls, they tax that. If you have cubiles, they will take the dividers. Etc.

"Business property", for lack of a better description, refers to all objects owned by the business, including things like the garbage cans under every desk.

Imagine paying taxes on your desks and computers to the city of Los Angeles FOREVER.

Surreal? Yeah.

Real? Absolutely.

Fucking crazy? Without a doubt.

And that's just the tip of the iceberg.

Where do you think businesses get this city tax money from? Well, they add it to their cost equation and the prices they charge are adjusted incrementally in order to maintain the profit margin they might need to conduct business, R&D, grow, have a financial cushion (you know, pandemics and shit), etc.

If costs go up, prices go up.

If prices go up, you become less competitive with lower cost-basis geographies.

If you are less competitive with other geographies due to your underlying cost structure, buyers will migrate to providers in those regions.

That could be nationally or international.

When buyers migrate, you struggle to survive, might have to downsize or just move to those locations.

In the long run, jobs are lost and businesses leave.

Look what they are doing now in CA with regards to rooftop solar. They are going to kill off the entire industry.

> Most businesses leaving California report growing losses after they leave.

Stop watching CNN brother. You are in the Matrix. This is patently false. I know so many who have left and thrived in places like Arizona and Texas that I have probably lost count. Lots of these have taken valuable talent with them.

In our case, most of our business is international or aerospace-related. So long as we are in the US, it really doesn't matter where we are. You can't manufacture shit here in California anyway, the underlying costs are very high. The difference in cost structure for suppliers we have here and in other states is hard to comprehend unless you are ready to understand and accept the fact that imposing high taxes and high regulatory costs on businesses, in the long run, is highly destructive. Most people don't have a good sense of what business looks like under the hood, so, no, I don't expect most to truly understand this.

You might want to read this:

https://www.forbes.com/sites/adammillsap/2021/08/27/business...

and this:

https://pv-magazine-usa.com/2022/12/15/california-pulls-the-...

Watch this:

What's Behind California's 'Business Exodus'

https://www.youtube.com/watch?v=2dJ2ARP0J-E

[gamblor956]

Lol. I do tax for a living. I can say with absolute certainty that every single one of my clients that left California regretted it. And yes, my clients included manufacturing and aerospace companies, privately owned companies and Fortune 500 companies.

They blamed taxes, moved to Texas or some other "low tax" state, and discovered the problem wasn't the taxes. It was their business. Most of them aren't around anymore, having gone bankrupt or been swallowed up by better run businesses.

It sounds like your business has a fundamental problem with its execution. It's immediately apparent from you blaming "underlying costs", and what you really mean is that California doesn't coddle businesses with tax incentives or free money. (See, for example, your rooftop solar complaint, where you really mean the days of easy money for solar installers is going away now that there is a sufficient market that they no longer need government subsidies.)

California has been the world's 4-6th largest economy for several decades. If taxes were as killer as you said they were, it would have flamed out decades ago.

Low tax jurisdictions have low taxes because they need to have low taxes in order to have any chance at competing with properly run economies like CA and NY. Midwestern states don't give out massive government subsidies out of the goodness of their hearts, they do it because the labor force is incompetent and they need to give out massive subsidies to get companies to put up with the huge inefficiencies of a poorly educated workforce that doesn't believe in science.

It looks like your business will learn all this the hard way.

[robomartin]

> It was their business

If it was there business that was the case before they left CA. If they leave CA because they think lower taxes alone will help them, they are dead businesses walking. Moving won't help them at all.

> It's immediately apparent from you blaming "underlying costs"

Sure. Sure.

You are focusing on taxes. There's so much more to the issue than just taxes. In fact, I would say lower taxes is just gravy. The structural issues in CA are very serious. If you really want to understand, watch the video I linked. That's just a starting point, BTW.

> for example, your rooftop solar complaint

I guess you don't understand solar either.

Here's a bit of useful advice:

Take your own money. Start a non-trivial business in CA and learn about business reality.

At the same time, take your own money, install a solar system on your home and then learn about the realities of solar as well.

My favorite saying, often attributed to Mark Twain: A man holding a cat by the tail learns something he can learn in no other way.

Most people think they "know", when they really don't. This is seen all the time on HN and other online forums where people love to voice strong opinions on everything, whether they know anything about it or not. It would be funny, except when people have the right to vote on things they truly aren't qualified to understand. It would be like me voting on issues of medical science. Not qualified. At least I am honest enough to understand and admit this.

[gamblor956]

My clients included startups and real businesses at every stage in the business cycle. I am now in house and until involved in running a profitable business. The video you linked is just clickbait FUD; structural issues are way worse in the Southeast states that businesses claim to love. (But without massive government subsidies, businesses don't naturally choose to be in those states... hmmm....)

I clearly know more about running a business than you in the state is California.

If you're truly having this much trouble running your business in CA I suggest reaching out to your local chamber of commerce for support.

[robomartin]

This is hilarious. There are literally thousands of businesses doing very well after moving out of CA and you think you know better because you run Quickbooks. As if nobody can run a great business anywhere outside CA. Please.

[gamblor956]

Lol, I don't use Quickbooks, though several of my former startup clients did. One of them had profits of about $3xx million last year on sales of roughly $2 billion, and they're still using Quickbooks. Quickbooks is a lot more powerful than people think it is, though at that size they really should be considering Fusion instead, or even upgrading directly to SAP or Oracle if they foresee needing that sort of complexity.

My client base of successful California companies exceeded the value of the companies fleeing California by about several hundred billion dollars. Post-COVID, the CA companies are even more valuable than the ones that fled California when they couldn't cut it in a competitive capitalist environment. But yes, you're right that companies that took government handouts from other states to leave CA are surviving off those governments handouts.

However, you're just embarrassing yourself. You've been whining on HN about your company leaving California for a few years now, it's pretty clear that at this point your company has evaluated that option and determined it was actually a stupid thing to do. It's like Elon Musk's "first order thinking": leaving California sounds great on paper until you actually look at the numbers and discover that it doesn't solve anything and actually makes things worse.

[mechanical_bear]

Citation needed.