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Friday, 23 November 2012 09:45

Latest U-Haul Index Shows Californians Leaving for Texas

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One of the best indicators of a state’s economic health, according to John Merline, writing in Investor’s Business Daily, is the “U-Haul Index” (first publicized by economist Mark Perry) to see what people are paying to move into, or out of, the state. Renting a 20-foot truck one way from San Francisco to San Antonio, Texas, for example, costs $1,693. Going in the other direction, however, costs only $983 for the same truck.

As Perry explains:

The American people and businesses are voting with their feet and their one-way truck rentals to escape California and its forced unionism, high taxes, and high unemployment rate for a better life in low-tax, business-friendly, right-to-work states like Texas.

They have lots of reasons to leave. According to the Tax Foundation, “Tax Freedom Day” arrives earlier in Texas than it does in California, due to its zero individual and corporate income tax and a lower sales tax. Put together, Texas’ state and local tax burden is less than eight percent of income, well below the national average of nearly 10 percent, while California’s is almost 12 percent.

This enormous disparity puts California the 48th out of the 50 states in the foundation’s overall business tax climate index, while Texas ranks ninth.

It isn't all about taxes, however. Its regulatory environment and yawning fiscal deficits are chasing companies away to more favorable locales. Part is the state’s determined efforts to increase still further its tax burden on high income earners — now an astounding 13 percent — along with its implementation of policies favored by the Obama administration in Washington. As Joel Kotkin of NewGeography.com put it,

California will serve as the prime testing ground for President Obama’s form of post-economic liberalism. Every dream program that the Administration embraces — cap and trade, massive taxes on the rich, high-speed rail — is either in place or on the drawing boards.

Despite the state’s efforts to redistribute the wealth from those who earned it to those who didn't, “the ranks of the poor have swollen to the point that the state, with 12% of the nation’s population, accounts for one-third of its welfare cases,” notes Kotkin.

In their study “The Great California Exodus,” Manhattan Institute’s authors Tom Gray and Robert Scardamalia looked not only at how many are leaving, but where they’re going and why. Since 1990 California has lost nearly 3½ million residents, most of them moving to southwestern states such as Texas, Nevada, and Arizona.

They blame this out-migration on California’s “chronic economic adversity” as well as its population density: Los Angeles and Orange County have nearly 7,000 people per square mile, more than either New York City or Chicago. A third factor is what they call the state’s “constant fiscal instability” and the likelihood that its continued spending beyond its means will result in even higher taxes in the future.

Put altogether, then, the authors conclude

that many cost drivers — taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs — are prompting businesses to locate outside California, thus helping to drive the exodus.

The U-Haul Index has been confirmed in each of the last eight years by Chief Executive magazine in its annual survey of CEOs: "Texas easily clinched the No. 1 rank, the eighth successive time it has done so. California earns the dubious honor of being ranked dead last for the eighth consecutive year."

 The magazine notes the obvious:

California’s enduring place of perpetual decline continues in this year’s ranking. Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell. The economy, which used to outperform the rest of the country, now substantially under performs.

And its status as the most ruinously contentious place to operate remains undisturbed in eight years. Its unemployment rate, at 10.9 percent, is higher than every other state except Nevada and Rhode Island. With 12 percent of America’s population, California has one-third of the nation’s welfare recipients.

Each year, the evidence that businesses are leaving California or avoid locating there because of the high cost of doing business due to excessive state taxes and stringent regulations, grows.

The U-Haul index is right: More and more people think it’s worth it to pay extra to get out of California.

4 comments

  • Comment Link DRW Wednesday, 28 November 2012 17:23 posted by DRW

    The influx of liberals would dilute the conservative population of Texas, unless those departing California wish to return to conservative roots. California must have it's share of freedom-loving Americans too, maybe they will reinforce the constitutional base in Texas.

  • Comment Link Sandy Monday, 26 November 2012 12:25 posted by Sandy

    I lived through the influx of California people to Washington state. All we got is a bunch of whiners, bad drivers and liberals. They just voted the same crap as they did in their home state.

    I have since moved my business to Texas and hope against hope that they will find somewhere else to flee. We have enough liberals in Austin as it is.

  • Comment Link Hanson Sunday, 25 November 2012 12:35 posted by Hanson

    Obviously most of “us” who are leaving California (and I now a lot of us) are leaving because of the outrages taxes, out of control regulations, political, personal and religious oppression, insane gun control laws and disgust for a rapidly growing liberal extremist, socialist and Marxist political, social and moral climate. In fact those leaving California for other states are most likely more conservative than those currently residing in those other states. Consider the historical example giving to us by the Father of America. Just as the Founders left England and we now leave California. But did the Founders establish another England or a Republic? Those of us leaving California are not of the same caliber as the founders, but neither are we setting out to expand the California Socialist Empire but to escape it. We are voting with our feet.

  • Comment Link Gordon Freeman Sunday, 25 November 2012 07:06 posted by Gordon Freeman

    The problem is that when these people come to Texas they will continue to vote for the same destructive taxation and massive wellfare/regulation that made California inhospitable in the first place. So this is bad news for Texas in the long run.

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