Re: Grim numbers, just grim

Subject: Re: Grim numbers, just grim
From: Elna Tymes <Etymes -at- LTS -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Tue, 19 Feb 2002 01:42:27 -0800

Andrew Plato wrote:


California has more local taxes, more income taxes, and various other taxes.
Not to mention the sea of paper work, fees, charges, and other nonsense just
for the right to do business in California. I have employed people in
California as well Elna. Just to be registered in California to do business
cost something like $500. And there are disability and other taxes levied on
companies that are not national taxes.


California may have more local taxes, but that varies from county to county and city to city. As I pointed out, we're paying NO business tax for the privilege of doing business in Mountain View, except for the $30/year business license. In San Francisco, you pay more.

Except for the state income tax, the *payroll* taxes in California and Oregon are the same. The state income tax rate, however, probably differs from state to state. As for the other business taxes, I suspect that California's business taxes are higher than Oregon's, mostly because Oregon has historically been loathe to impose taxes on anything. Many other states require various forms of taxes and fees in order to do business - we founded our LLC in Delaware, and we still pay annual fees there to keep up our registration, even though our main office is in California. And yes, there is a state disability tax - which is the source of funds for paying people who get disabled on the job. I have no idea how or if Oregon funds disability payments for loggers or fishermen who become disabled as a result of their work.

As for "other taxes," yes they exist in California. We have a sales tax, which if you come from a state that doesn't have one feels onerous. Except that most of the states in the country now have sales taxes. And we have some other taxes too. However much of that tax money gets reinvested in things that ultimately benefit businesses, resulting in California now being the fifth largest economy in the world (yes, even this year!), right behind Great Britain. And even in a recession like this one, where the tech sector has been particularly hard hit, unemployment in Silicon Valley is still relatively low, if you believe government statistics. Across California, I believe the unemployment figures are somewhere around 6%. Contrast that with Oregon, which has the highest unemployment rate (did I read something like 13%?) in the country, closely followed by Washington.

Now for some caveats. Most of us in Silicon Valley believe that the unemployment figures don't represent the real facts: they don't include the foreign workers who have had to go home when their jobs evaporated. They probably also don't include the professionals who are skating by on their 401(k)'s and refinanced mortgages. But there are substantial portions of California's economy that are not tied up in the computer industry, and most of those sectors are doing just fine, thankyouverymuch.

There are several points to this. One is that what we are seeing is a recession that happened to hit the computer industry particularly hard. But one industry does not an economy make. Second, when used appropriately, business taxes can actually contribute to a better economy, one that is not dependent on a single industry or company (I happen to remember the Seattle billboard that appeared after a series of Boeing layoffs and said "Will the last person leaving Seattle please turn out the lights?") so that the economy of the entire state won't suffer in a sector downturn. Third, for all its problems, California and Silicon Valley remain pretty much THE place in the country where bright minds and technology can find money and talent to create businesses. A very recent nationwide poll of venture capital spent last year across the nation ranks Silicon Valley at the top in terms of both number and amount of venture capital investments: 35% of all venture capital investments went to Silicon Valley companies, with the next highest being 11% in the Boston area. (Other areas were generally in the 5-6% categories.)

Then there's the connection between industry and high quality educational institutions. Silicon Valley was originally Lockheed-centric, in the days when the DOD funded most technical research and development. Stanford University's engineering program and its head, Lewis Terman, founded the concept of close ties between town and gown, so to speak, in technical arenas. Many Stanford engineering projects went on to become Silicon Valley companies, some of which are still around in one form or another. UC Berkeley joined in on the idea, as did UCLA and USC (and later UC Irvine) in the Los Angeles area and eventually so did UC San Diego down south, all in somewhat different areas of technology. So while others can sneer at the so-called cost of doing business in California, there's a very real payoff to Your Tax Dollars At Work in this particular area.

Elna Tymes
Los Trancos Systems




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References:
Re: Grim numbers, just grim: From: Andrew Plato

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