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California’s Tax Man Cometh



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California’s governor, Jerry Brown, has been involved in an amusing spat with Rick Perry over whose state is more welcoming to business. Brown has been in rare form, calling Texas’s campaign to poach California businesses a “cry for help” and “not a burp. It’s barely a fart.” He also dissed the Dallas Cowboys.

Despite Brown’s colorful rhetoric, California’s record is abysmal. The Tax Foundation ranked the state 48th in the nation in its 2013 State Business Tax Climate Index. And a new report from the California Business Round Table found that 69 percent of the state’s business leaders think California is the toughest place in the nation to do business.

And then there’s this development.

For 19 years, California offered a tax break for residents who owned shares in small businesses that based most of their workers and assets in-state. That tax break was ruled unconstitutional. So now California’s Franchise Tax Board is trying to claw back-taxes—plus interest—from the 2,000 residents who received the incentive. That adds up to around $120 million.

Perry could just stay silent. California’s apparently hell-bent on losing the argument.



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