November 18, 2013

Gov. Rick Perry and economist Dr. Arthur Laffer today contrasted the conservative fiscal principles that have helped Texas become a national leader in job creation with those that have burdened families and businesses in states like California. The governor spoke at the Texas Public Policy Foundation’s Competition and the States: California vs. Texas luncheon, where Laffer unveiled a new study comparing the governments and economies of the two states.

“Texas vs. California is a pivotal contrast in a debate that really speaks to our nation’s future,” Gov. Perry said. “Just as we have in recent years, Texas continues to outperform California in terms of employment rate, growth in output and gross domestic product. We also continue to dominate in terms of population shift, which is about as clear a sign of quality of life as you can find. That’s because it’s the answer to the most basic question: Where would you rather live?

According to Laffer’s study, the bigger and more intrusive government becomes, the more it harms the economy. California is one of the highest taxed states, with the highest income and capital gains taxes in the nation. Texas, on the other hand, is one of the lowest taxed states, with zero income tax or capital gains tax. In addition, unlike California, Texas is a right-to-work state. This model of low taxes, smart and predictable regulations and fair courts has helped Texas become one of the strongest state economies in the country, and helped the Lone Star State gain seven Fortune 500 company headquarters from 2001-2012.

“The differences between California’s and Texas’ economic policies and performances couldn’t be more stark,” Laffer said. “Texas has a low-tax, business friendly environment. California has punitively high tax rates and seems to put up every possible barrier to entry for business. Texas is welcoming more and more companies, jobs and people each year, while California is desperately trying to build a wall to keep its companies, jobs and people from fleeing to greener pastures. The people have spoken.”

Texas’ population and economy are booming, as businesses and families from high-tax states move to low-tax states that have jobs available and that allow them to keep more of what they earn. As noted in Laffer’s study, Texas has had a net adjusted gross income gain of $14.7 billion over the past six years, while California lost $19.2 billion. Additionally, California has the highest percentage of its population on welfare, while Texas has the fourth lowest. Texas also has significantly less poverty, and has maintained a significantly lower unemployment rate.

Texas’ strong jobs climate continues to receive national recognition. Earlier this year, Texas was named the best business climate by Business Facilities Magazine, most competitive state by Site Selection Magazine, and best state for global trade by Global Trade Magazine. Chief Executive Magazine has also ranked Texas as the best state for business for nine years in a row through their annual survey of CEOs.

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