Texas Gov. Rick Perry poaches California businesses

The Lone Star State's governor touts its low taxes and business-friendly nature, but California's still-bustling economy is making him beg.

By Jason Notte Feb 6, 2013 9:29AM
Oil Refinery Tanks, Corpus Christi, Texas -- Kevin Burke, Corbis

Texas doesn't have redwood forests, a spot on the Pacific, Hollywood or a team in the last Super Bowl or World Series. But it doesn't have California's taxes either.

Texas Gov. Rick Perry's failed presidential campaign didn't make it to the California primary last June, but that's not stopping the single-minded state executive from trying to lure the Golden State's businesses and wealthier residents his way.

Perry has started running radio ads in San Francisco, Sacramento, Los Angeles and San Diego touting his state's low taxes and business-friendly approach in light of recent California tax increases. He kicks off the 30-second ads with this little zinger:

Building a business is tough, but I hear building a business in California is next to impossible. This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas.

CNBC ranked Texas as its No. 1 state for business last year, while California drifted toward the bottom of the pile at No. 40. Perry, meanwhile, points out that his state has won the "Best State for Business" title from Chief Executive magazine eight years in a row. He also notes that the cost of doing business in California is 6.3% above the national average and Texas' is 4.6% below it.

This all brings up one really important question: If Texas is such a business powerhouse, why is it begging California businesses and Californians themselves to come on down? Simple: California is still the only state whose economy generates more business than Texas. As of 2011, its gross domestic product sat at $1.96 trillion and made up 13.1% of the nation's total economy. Not only does that give it a greater share than the 8.7% taken up by Texas' $1.31 trillion GDP, but that gives it a larger economy than India ($1.897 trillion GDP in 2011), Russia ($1.86 trillion), Canada ($1.736 trillion), Australia ($1.51 trillion) and Spain ($1.478 trillion).

"I can understand why Rick Perry is interested in California. We were the national jobs leader for most of the last year with 257,000 new private sector jobs," said Kish Rajan, director of the California Governor's Office of Business and Economic Development, told CNN. "Real job creation comes from California's history as a national leader in start-ups and the expansion of homegrown businesses."

As CNN points out, however, California's recent approval of sales taxes and new taxes on the wealthy created an opening for Perry's publicity campaign. Unfortunately for Perry, business relocation accounts for only 0.03% of California's job losses. Also, despite golfer Phil Mickelson's grousing about taxes costing him a stake in the San Diego Padres and Perry imploring him via Twitter to move down to Texas, he's stayed put.

Taxes may be enough to pry a handful of frugal business owners out of the state, but until Texas paves itself a Pacific Coast Highway, plants its own Napa Valley and convinces San Francisco and nearby Silicon Valley to flatbed themselves next to Austin, it could be a tough sell.

More on moneyNOW

Feb 6, 2013 3:31PM
Yeah cheaper now, but if a lot of profitable businesses did move to Texas, then watch the taxes grow as Texas has to build up its infrastucture to accommodate all the people and businesses needs as they move in and around the state!!! Republican no regulation on business is why they can make that statement about better for business, but in the long run ,not better for the people because of excessive pollution caused by nonregulation!!!
Feb 7, 2013 5:19AM
This MSN Money story on Texas v. California misuses the English language in relying upon the word "poach" to describe Texas’s attempts to interest California businesses in relocating. Definitions of "poach" include taking something illegally or trespassing on another's property to take fish or game. Texas officials are doing absolutely nothing illegal or unfair when they visit beleaguered California companies to describe their superior business environment. It's not just Texas, but many states and cities are working to interest companies in business-bashing California to relocate to their friendlier locales. What do you expect when California keeps increasing taxes and companies must keep an eye on costs in this competitive world? Some recent tax increases are retroactive, which I consider immoral. Regulations, harsh fines for minor transgressions and frivolous lawsuits also are a problem in the so-called Golden State. Texas isn't "begging" (another misuse of the English language) any company to move there. When operating costs can be reduced by between 20% and 40%, depending upon which state a California company migrates to, no one need "beg." It's accurate to say that California's politicians -- most of whom know zero about how to run a business -- are motivating companies to prudently examine their location options regardless of whether they are in survival mode or growth mode. -- Joseph Vranich, Spectrum Location Solutions, Irvine, Calif.
Feb 7, 2013 1:33PM

"We have way too many slaves and way not enough slave owners here in Texas".


Please help me control the peons!


~Rick Perry~

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