Archive for the ‘California Out-Migration’ category

Another Firm Says ‘Bye’ to California: Moves Silicon Valley Headquarters to Indiana

June 16, 2016

Determine, Inc., a software company, will relocate its headquarters to Carmel, Indiana, about 30 miles north of Indianapolis. The company’s announcement said the new headquarters will provide a home base as of this month (June) for its worldwide business, which includes offices in California, Georgia, France and the United Kingdom.

Indiana-StateSeal.svg“It was a big decision to leave Silicon Valley,” said Patrick Stakenas, Determine’s president and CEO. “Locating in Carmel offers us an extremely solid business environment and a quality of life that will allow us to attract and retain talented employees. Due to these key points, the bulk of our future U.S.-based growth will be in Indiana.”

Note the reference to attract and retain employees. While I’m not privy to the company’s retention rate, it’s well known that employees in Silicon Valley and San Francisco are job hoppers extraordinaire.

Gov. Mike Pence said, “In Indiana, we maintain a balanced budget and have cut costs and taxes, creating a fiscally predictable environment that allows entrepreneurs and job creators to invest in what matters most – their business and their employees.”

The company’s enterprise customers include AOL, Cushman & Wakefield, Endo Pharmaceuticals, Nordstrom, and Sony Music Entertainment.

The Indianapolis Star reported that Determine Inc. has been based in the heart of Silicon Valley in San Mateo.

Inside Indiana Business said Determine is hiring for customer support, professional services, software development and financial positions. The company was founded in 1996 under the name Selectica.

A study, California Business Departures: An Eight-Year Review 2008-2015, published this January, included a sampling of other California-to-Indianapolis moves.

For example, Memory Ventures, in looking for a location for the growing company’s new headquarters, avoided Los Angeles. “The business environment in California is very challenging,” CEO Anderson Schoenrock said, citing the tax structure, government regulation and the high cost of living. “Over time, that grinds on you and your employees.” The company was founded in 2007 with its first brand, ScanDigital, and has been featured on the Inc. 500 and Deloitte’s Technology Fast 500 lists.

Last year, Emarsys, a Vienna, Austria-based digital technology company, located its North American headquarters in Indianapolis. Emarsys has a handful of employees in California, and decided to settle in Indianapolis after considering San Francisco.

Finally, Appirio Inc., another software company, moved its headquarters from San Francisco to Indianapolis.

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One focus of this blog has been to address California’s difficult business environment.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

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California Gas Prices to Jump 13-to-20 Cents per Gallon Jan. 1— This is Not a Joke

August 27, 2014

It isn’t often that I’m speechless — but I’m speechless.

California Gov. Jerry Brown and the legislature refuse to stop an unprecedented increase in gasoline prices. So, effective January 1st, the cost of a gallon of gasoline in California will spike between 13 and 20 cents per gallon. No other state will do this.

The price hike is an outgrowth of a state law, the California Global Warming Solutions Act, AB 32, which created a cap-and-trade system relating to carbon emissions. Even though the state issues only about 1 percent of the world’s greenhouse gases, it nevertheless has instituted draconian regulations that will cost industry billions of dollars in fees to purchase carbon credit allowances. The gasoline price increase will result from energy companies being required to pay higher fees, which will be passed onto businesses and consumers.

And it could get even more expensive. California’s Legislative Accounting Office found that increases resulting from cap-and-trade penalties could exceed 50 cents per gallon by 2020.

All of this is on top of California’s current gasoline tax. The Tax Foundation puts the state in 1st place nationwide with the highest rate of 52.89 cents per gallon. Adding in the 18.4 cent federal excise tax means California consumers now pay 71.29 cents per gallon to various public treasuries.

The new requirement will harm business operations in California for several reasons:

  • Any company with a union agreement that ties compensation to the cost-of-living will see an increase in labor costs as soon as contract provisions permit. (Keep in mind that Californians are now seeing costs increase for taxes, apartment rentals, utilities and food.)
  • Next, countless small businesses that rely on gasoline-powered pickup trucks and delivery vans (e.g., farmers, contractors, retailers) will see costs rise.
  • Finally, much of the new “river of  revenue” to the state will be wasted, in typical Sacramento fashion, further entrenching the state’s 373 public agencies, commissions and boards.

Anyone with a heart will recognize the harm done to individuals, particularly the poor, or people in agricultural areas who must drive long distances for their jobs.

Measures like cap-and-trade are supported by more than environmentalists — they are promoted by the ultra-rich and celebrities living in their San Francisco, Silicon Valley and Los Angeles enclaves.  That group, I presume, will celebrate the New Year with extra high-fives all around. That is, before they head off to their limousines.

See more about this sad state of affairs in two stories in the Sacramento Business Journal“Steinberg: Cap-and-trade expansion will not be delayed” (Aug. 26 story) and “Analyst: Cap-and-trade will push gas prices up as much as 20 cents” (Aug. 7 story).

One focus of this blog has been to address California’s perennially difficult business environment. Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

Chief Executive Magazine Issues 2014 State Biz Climate Rankings

May 11, 2014

In its latest survey, Chief Executive magazine again ranked Texas the best state for business, followed by Florida, Tennessee, North Carolina and South Carolina.

I’ve publicly predicted that the survey would rank California the worst state for business for the 10th year in a row because of what has been happening with tax increases and more employer-unfriendly labor laws. Out-of-control public pension obligations are also a concern because they represent “tax increases in waiting.”

Well, that 10-year mark is exactly what happened. So, again, California ranks 50th. Rounding out the bottom five are New York, Illinois, New Jersey and Massachusetts.

Here are some of the magazine’s observations:

California has gained breathing space since Governor Jerry Brown took office and is credited with a budget surplus. But despite the return of fiscal discipline, it has exchanged acute problems for merely chronic ones. It is a state that continues high personal income tax rates and regulates with a very heavy hand. Its top, marginal tax rate of 33 percent is the third-highest tax rate in the industrialized world, behind only Denmark and France.

Note: I have no intention of starting an argument with the fine folks at Chief Executive. However, considering Sacramento’s plans to increase spending by billions of dollars on wretched projects, and with new tax increases being proposed, I doubt that we in this state have a “return of fiscal discipline.”

The magazine also states:

“California likes to say that Texas can have all those low-wage jobs,” says Richard Fisher, CEO of the Dallas Federal Reserve, “but from 2000 to 2012, job growth percentage change by wage quartile was better in Texas.” Texas won another bragging right last February when Site Selection magazine reported that it surpassed California in global technology exports in 2012.

Congratulations to JP Donlon, Editor-in-Chief of Chief Executive and to the magazine’s team for a remarkable and valuable survey.

See 2014 Best & Worst States for Business and the State Rankings. Clicking on the name of a state in the rankings column will bring you to additional information.

One focus of this blog has been to address California’s perennially difficult business environment. Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

Powerful Column About Out-of-California Migration

May 11, 2014

The upcoming departure of Toyota’s headquarters from California to Texas has sparked renewed interest in the topic of companies migrating from one state to another. Also, individuals are moving from states with high income taxes to states with low income taxes or no such tax at all.

A new analysis contains striking findings about relocations – see economist Art Laffer’s new Investor’s Business Daily column,  “California’s High-Tax, Big-Government Comedown.”

This is a good time to address a new twist in out-of-California migration. It appears that more soon-to-be-retired individuals are planning to pack their bags for states with a friendlier attitude towards taxpayers.

The reason seems to be that California taxes all 401K, Traditional IRA, and pension distributions as ordinary income. This is so even though there is nothing “ordinary” about accumulated wealth. For example, an individual who has worked 40 years, but only 10 of those were in California, will pay taxes to Sacramento on all distributions stemming from 30 years of income earned in other states.

There are states with income taxes that permit such distributions to be completely exempt. Of course, states with no income taxes don’t take a penny of the distributions. Kiplinger says “the Golden State is a retiree’s tax nightmare.” It’s easy to compare the tax consequences of retiring in California with other states by going to the State-by-State Guide to Taxes on Retirees.

Considering how big a bite Sacramento wants, some retirees feel that the sunshine and nice beaches aren’t that alluring anymore.

Anyway, Mr. Laffer’s column takes a deep and valuable look at moves out of California. It’s well worth reading.

One focus of this blog has been to address California’s perennially difficult business environment. Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.