California’s major increase in personal income tax this year has high-income residents and small business owners looking elsewhere to live and set up shop. A court ruling over capital gains has put many business owners on the hook for retroactive taxes unless the California legislature acts.
In short, California scares people who want to run businesses.
We at Commercial Real Estate Group of Tucson tell California companies who are searching for commercial real estate that they should take a good look at relocating to Arizona. We believe they’ll like what they see.
Pollina Report on Business-Friendly States
The Golden State’s friendliness to business has been horrible for a long time. The Pollina Corporate Top 10 Pro-business States for 2012 has given California an “F” grade for at least five years.
The Pollina report gave Arizona a “B” in last year’s state grades. Arizona did better than California in 17 factors that measure labor, taxes, business expenses, economic incentives and other site selection considerations.
California earned only one grade higher than Arizona in crime rate and in sales and gross receipt tax; it was greatly higher in the grades for college completion and average teacher compensation.
Arizona’s grades, on the other hand, far exceed California’s in
- right-to-work status
- workers compensation costs
- corporate tax index
- individual tax index
- comprehensive tax for new firms
- electricity costs
- state budge deficit
- marketing efforts and responsiveness to new and existing employers.
Business Savings in Arizona
Information compiled for the Arizona Commerce Authority confirms that it costs less to run a business in major cities of Arizona than in California’s big metropolitan areas.
|Metro Area||Median Wages, All Occupations||Cost of Living Index||Real Estate Annual Operating Costs (/SF)|
|San FranciscoSan Jose||$49,510$53,390||162.67150.26||$10.78$9.60|
Tucson and Phoenix also have much lower costs compared to California’s metro areas for
- average commercial electricity
- average industrial electricity
Recently passed state legislation will drop the property taxes of businesses that expand. In the summer a sales tax increase will expire and bring it more in line with California’s metro levies.
What About Texas?
Texas Gov. Rick Perry jumped on the recent dissatisfaction of California residents and businesses. He invited them to consider his state as a place to find tax and business-expense relief.
We plan to do something similar. Companies should consider relocating to Arizona, especially since Phoenix and Tucson are comparable in business costs to the Dallas/Fort Worth/Arlington and Dallas/Plano/Irving metropolitan areas, according to the Arizona Commerce Authority.
And the Pollina report ranks Arizona higher as a pro-business state, 17 compared to Texas’s 33.
Corporate commercial real estate site selectors are finding out that expanding or relocating to Arizona deserves consideration. We think that’s a smart move.
To learn more about how Arizona compares to California for business relocation and expansion, contact Commercial Real Estate Group of Tucson, 520-299-3400, Michael@cretucson.com.
Watch for future posts comparing the virtues of Arizona with other states.