California Employers Need Relief from Over Taxation & Regulation

An energy executive named Don Blankenship recently asserted in the Washington Examiner that over-regulation is not only a significant contributing factor to the recession, but will impede America’s economic recovery. It’s a condition he calls a ‘reg-cession,’ a word that aptly describes California’s hobbling economy.

Tabulating the exact cost of California’s excessive red tape on businesses had been more anecdotal than concrete until very recently when the results of a study headed by Sanjay Varshney, the dean of the College of Business Administration at California State University Sacramento, were revealed. The Varshney study, commissioned in 2006 by Assembly Bill 2330 (Arambula; I-Fresno) concluded that small businesses – which account for 99% of all employers in California – were each hit with more than $134,000 in regulatory costs in 2007. The total cost of regulation to California came to a staggering $493 billion and is responsible for the loss of an estimated 3.8 million jobs. That’s roughly one job lost for every small business.

Today there are more than 2.2 million people unemployed in California, and yet only a handful of job-creating bills were passed by the Legislature this year. Worse, numerous bills were introduced to add even more impediments to California businesses. Among the worst, identified by the California Chamber of Commerce as “job killer” legislation, is Assembly Bill 793 (Jones; D-Sacramento) a bill that exposes employers to unlimited liability in lawsuits over workplace disputes decades after the fact by revising the statute of limitations on any workplace claim or lawsuit – renewing it each time an employee’s compensation is impacted, including every time they are paid.

California’s laws pertaining to pay discrimination are already quite stringent, and include a longer statute of limitations than federal law provides. AB 793 is a perfect example of how those beholden to organized labor continually cast employers in the role of villain.

The Tax Foundation has ranked the respective business tax climates of the states for some time, and California’s standing continues to be abysmal. According to their 2010 report, we are 48th overall, which reflects the fact that we have the highest car tax in the nation; highest sales tax in the nation; highest corporate income tax in the nation; and almost the highest personal income tax in the nation.

Though it may be convenient for some to lay California’s economic problems entirely at the feet of the global economic downturn, the fact is we’ve redefined the phrase ‘hostile work environment’ in the Golden State. Too many of our financial problems are self-inflicted. Our burdensome tax structure and onerous regulatory framework have been driving business from our borders for years. And if we don’t address the underlying factors that make it so hard to create and retain jobs in California, our economy will continue to languish in the dust long after the rest of the nation has recovered.