NCPA - National Center for Policy Analysis

See You in Nevada

September 11, 2003

A bill that would mandate employer-paid health insurance for all California companies with more than 20 employees (SB 2), will only compound the economic problems facing the state of California, says Investor's Business Daily.

The cost of this mandate has been estimated at almost $8 billion. This would not be simply another would for California's struggling businesses; it will be their burial, says IBD.

Small businesses account for more than 90 percent of California businesses and the jobs they provide will be put to rest:

  • California's business climate has been rated the worst in the nation; the Tax Foundation rated California's tax environment as the 49th worst in the country, just ahead of Mississippi.
  • California workers' compensation costs have increased 50 percent in 2003 and are slated to increase next year as well; unemployment insurance is expected to increase 12 percent or $2 billion in 2004.
  • And California's corporate tax rate for businesses, at 8.8 percent, is the highest in the West.
  • Since the mid-1990s, 2.2 million skilled workers and retirees have left the state.
  • Companies, such as Buck Knives, are choosing to move or expand their operations in the more business-friendly climates of Idaho, Nevada and Texas.
  • Given these conditions, it is not surprising that the unemployment rate in California is consistently 10 to 30 percent above the national average.

Despite these grim statistics, various tax increases are being proposed as a way to soften the blow of added health care costs to small business, says IBD.

Source: Editorial, "Hello, Nevada: Labor, Firms Flee California," Investor's Business Daily, September 11, 2003.


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